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In economics, rationalization is an attempt to change a pre-existing ad hoc workflow into one that is based on a set of published rules. There is a tendency in modern times to quantify experience, knowledge, and work. Means–end (goal-oriented) rationality is used to precisely calculate that which is necessary to attain a goal.
In general usage, one is said to be rational if one is sane or lucid. [15] In economics, rationality means that an economic agent specifies, or acts as if he implicitly specifies, a way to characterize his or someone's well-being, and then takes into account all relevant information in making choices so as to optimize that well-being.
Rationality is normative in the sense that it sets up certain rules or standards of correctness: to be rational is to comply with certain requirements. [2] [15] [16] For example, rationality requires that the agent does not have contradictory beliefs. Many discussions on this issue concern the question of what exactly these standards are.
Imagine there's a game where one person is placed in a room and assigned the role of the "sender." A second person in a different room is assigned the role of "receiver." The sender is given $20 ...
Polanyi argued that the term economics has two meanings: the formal meaning refers to economics as the logic of rational action and decision-making, as a rational choice between the alternative uses of limited (scarce) means. The second, substantive meaning, however, presupposes neither rational decision-making nor conditions of scarcity.
Also called resource cost advantage. The ability of a party (whether an individual, firm, or country) to produce a greater quantity of a good, product, or service than competitors using the same amount of resources. absorption The total demand for all final marketed goods and services by all economic agents resident in an economy, regardless of the origin of the goods and services themselves ...
Many economics models assume that agents are on average rational, and can in large quantities be approximated to act according to their preferences in order to maximise utility. [2] With bounded rationality, Simon's goal was "to replace the global rationality of economic man with a kind of rational behavior that is compatible with the access to ...
Some troops leave the battlefield injured. Others return from war with mental wounds. Yet many of the 2 million Iraq and Afghanistan veterans suffer from a condition the Defense Department refuses to acknowledge: Moral injury.