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Practical beliefs vs. scientific beliefs: two kinds of maximization

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  • Elias Khalil

Abstract

There are two kinds of beliefs. If the ultimate objective is wellbeing (utility), the generated beliefs are “practical.” If the ultimate objective is truth, the generated beliefs are “scientific.” This article defends the practical/scientific belief distinction. The proposed distinction has been ignored by standard rational choice theory—as well as by its two major critics, viz., the Tversky/Kahneman program and the Simon/Gigerenzer program. One ramification of the proposed distinction is clear: agents who make errors with regard to scientific beliefs (e.g., the conjunction fallacy) should not be taken as committing irrationality—because they are most probably engaging the other kind of maximization, the pursuit of wellbeing. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • Elias Khalil, 2013. "Practical beliefs vs. scientific beliefs: two kinds of maximization," Theory and Decision, Springer, vol. 74(1), pages 107-126, January.
    • Handle: RePEc:kap:theord:v:74:y:2013:i:1:p:107-126
    DOI: 10.1007/s11238-012-9338-z
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    References listed on IDEAS

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    1. repec:cup:judgdm:v:4:y:2009:i:2:p:116-125 is not listed on IDEAS
    2. Simon, Herbert A, 1978. "Rationality as Process and as Product of Thought," American Economic Review, American Economic Association, vol. 68(2), pages 1-16, May.
    3. Khalil, Elias L, 1997. "Buridan's Ass, Risk, Uncertainty, and Self-Competition: A Theory of Entrepreneurship," Kyklos, Wiley Blackwell, vol. 50(2), pages 147-163.
    4. Elias L. Khalil, 1997. "Buridan's Ass, Risk, Uncertainty, and Self‐Competition: A Theory of Entrepreneurship," Kyklos, Wiley Blackwell, vol. 50(2), pages 147-163, May.
    5. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    6. Elias Khalil, 2011. "Rational, Normative and Procedural Theories of Beliefs: Can They Explain Internal Motivations?," Journal of Economic Issues, Taylor & Francis Journals, vol. 45(3), pages 641-664.
    7. Becker, Gary S, 1993. "Nobel Lecture: The Economic Way of Looking at Behavior," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 385-409, June.
    8. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    9. Elias Khalil, 2009. "Natural selection and rational decision: two concepts of optimization," Journal of Evolutionary Economics, Springer, vol. 19(3), pages 417-435, June.
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    More about this item

    Keywords

    Rational choice theory; Leontief preferences; Kenneth Hammond; Simon/Gigerenzer program; Tversky/Kahneman program; Aristotle; D03;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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