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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.
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. [citation needed] Means–end (goal-oriented) rationality is used to precisely calculate that which is necessary to attain a ...
The term "economic rationalism" is commonly used in criticism of free-market economic policies as amoral or asocial. In this context, it may be summarised as "the view that commercial activity... represents a sphere of activity in which moral considerations, beyond the rule of business probity dictated by enlightened self-interest , have no ...
The concept of economic rationality arises from a tradition of marginal analysis used in neoclassical economics. The idea of a rational agent is important to the philosophy of utilitarianism, as detailed by philosopher Jeremy Bentham's theory of the felicific calculus, also known as the hedonistic calculus.
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 ...
Rationality plays a key role in economics and there are several strands to this. [110] Firstly, there is the concept of instrumentality—basically the idea that people and organisations are instrumentally rational—that is, adopt the best actions to achieve their goals.
Evolutionary economics is a school of economic thought that is inspired by evolutionary biology.Although not defined by a strict set of principles and uniting various approaches, it treats economic development as a process rather than an equilibrium and emphasizes change (qualitative, organisational, and structural), innovation, complex interdependencies, self-evolving systems, and limited ...
Ecological rationality challenges rational choice theory (RCT) as a normative account of rationality. According to rational choice theory, an action is considered rational if the action follows from preferences and expectations that satisfy a set of axioms, or principles. These principles are often justified based on consistency considerations ...