Mongin, Philippe (1998): Does optimization imply rationality?

PDF
MPRA_paper_37740.pdf Download (553kB)  Preview 
Abstract
The relations between rationality and optimization have been widely discussed in the wake of Herbert Simon's work, with the common conclusion that the rationality concept does not imply the optimization principle. The paper is partly concerned with adding evidence for this view, but its main, more challenging objective is to question the converse implication from optimization to rationality, which is accepted even by bounded rationality theorists. We discuss three topics in succession: (1) rationally defensible cyclical choices, (2) therevealed preference theory of optimization, and (3) the infinite regress of optimization. We conclude that (1) and (2) provide evidence only for the weak thesis that rationality does not imply optimization. But (3) is seen to deliver a significant argument for the strong thesis that optimization does not imply rationality.
Item Type:  MPRA Paper 

Original Title:  Does optimization imply rationality? 
Language:  English 
Keywords:  Optimization, Rational Choice, Bounded Rationality, Transitivity, Revealed Preference, Infinite Regress 
Subjects:  D  Microeconomics > D2  Production and Organizations > D21  Firm Behavior: Theory D  Microeconomics > D1  Household Behavior and Family Economics > D11  Consumer Economics: Theory B  History of Economic Thought, Methodology, and Heterodox Approaches > B4  Economic Methodology > B41  Economic Methodology 
Item ID:  37740 
Depositing User:  Philippe Mongin 
Date Deposited:  29. Mar 2012 19:24 
Last Modified:  24. Apr 2015 08:08 
References:  Anand, P.: 1987, "Are the Preferences Axioms Really Rational?", Theory and Decision, vol. 23, p.189214. Anand, P.: 1993, "The Philosophy of Intransitivite Preference", Economic Journal, vol. 103, p.337346. Aristotle, The Nichomachean Ethics. Aumann, R.J.: 1962, "Utility Theory Without the Completeness Axiom", Econometrica, vol. 30, p. 445462. Aumann, R.J.: 1976, "Agreeing to Disagree", Annals of Mathematical Statistics, vol. 4, p.12361239. BarHittel, M. and A. Margalit: 1988, "How Vicious Are Cycles of Intransitive Choice?", Theory and Decision, vol. 24, p. 119145. Becker, G.S.: 1976, The Economic Approach to Human Behavior, Chicago, The University of Chicago Press. Bernheim, D.B.: 1984, "Rationalizable Strategic Behavior", Econometrica, vol.52, p. 10071028. Bernheim, D.B.: 1986, "Axiomatic Characterizations of Rational Choice in Strategic Environments", Scandinavian Journal of Economics, vol.88, p.473488. Blyth, C.R.: 1972, Some Probability Paradoxes in Choice from Among Random Alternatives", Journal of the American Statistical Association, vol. 67, p. 366373; and "Rejoinder", p. 379381. Campbell, D.: 1978, "Realization of Choice Functions", Econometrica, vol. 46, p. 171180. Conslick, J.: 1988, "Optimization Cost", Journal of Economic Behavior and Organization, vol. 9, p. 213228. Conslick, J.: 1996, "Why Bounded Rationality?", Journal of Economic Literature, vol. 34, p.669700. Davidson, D., J.C.C. McKinsey and P. Suppes: 1955, "Outline of a Formal Theory of Value, I", Philosophy of Science, vol. 22, p. 140160. Debreu, G.: 1959, Theory of Value, Cowles Foundation Monograph, New Haven, Yale University Press. Fishburn, P.C.: 1970a, Utility Theory for Decision Making, New York, Wiley. Fishburn, P.C.: 1970b, "The Irrationality of Transitivity in Social Choice", Behavioral Science, vol 15, p. 119123. Fishburn, P.C.: 1982, "Nontransitive Measurable Utility", Journal of Mathematical Pschology, vol 26, p. 3167. Fishburn, P.C.: 1988, Nonlinear Preference and Utility Theory , Baltimore, Johns Hopkins University Press. Fishburn, P.C.: 1991, "Nontransitive Preferences in Decision Theory", Journal of Risk and Uncertainty, vol. 4, p. 113134. Göttinger, H.W.: 1982, "Computational Cost and Bounded Rationality", in W. Stegmüller, W. Balzer and W. Spohn, ed., Philosophy of Economics, Berlin, Springer. Harsanyi, J.C.: 1976, Essays on Ethics, Social Behavior and Scientific Explanation, Dordrecht, D. Reidel. Karni, E. and D. Schmeidler: 1976, "Independence of Nonfeasible Alternatives and Independence of Nonoptimal Alternatives", Journal of Economic Theory, vol. 12, p. 488493. Laville, F.: 1998, "Modélisation de la rationalité limitée: de quels outils disposeton?", Revue économique, vol. 49,p. 335365. Lindley, D.V., I.J. Good, R.L. Winckler and J.W. Pratt: 1972, "Comment", Journal of the American Statistical Association, vol. 67, p. 373379 Lipman, B.: 1991, "How to Decide How to Decide How to...: Modeling Limited Rationality", Econometrica, vol. 59, p. 11051125. Lismont, L. and P. Mongin: 1994, "On the Logic of Common Belief and Common Knowledge", Theory and Decision, vol. 37, p.75106. Loomes, G. and R. Sugden: 1982, "Regret Theory", Economic Journal, vol.92, p.805824. Luce, R.D.: 1956, "Semiorder and a Theory of Utility Discrimination", Econometrica, vol. 24, p. 178191. Luce, R.D. and H. Raiffa: 1957, Games and Decisions, New York, Wiley. McClennen, E.F.: 1983, "SureThing Doubts", in B. P. Stigum and F. Wenstop, ed., Foundations of Utility and Risk Theory with Applications, Dordrecht, D. Reidel, p. 117136. McClennen, E.F.: 1990, Rationality and Dynamic Choice, Cambridge, Cambridge University Press. Malinvaud, E.: 1971, Leçons de théorie microéconomique, Paris, Dunod. Marschak, J.: 1950, "Rational Behavior, Uncertain Prospects, and Measurable Utility", Econometrica, vol.18, p.111141. May, K.O.: 1954, "Intransitivity, Utility and the Aggregation of Preference Patterns", Econometrica, vol. 22, p.113. Mongin, P.: 1984, "Modèle rationnel ou modèle économique de la rationalité?", Revue économique, vol. 35, p. 964. Mongin, P.: 1986, "Simon, Stigler et les théories de la rationalité limitée", Information sur les sciences sociales / Social Science Information, vol. 25, p. 555606. Mongin, P. and B. Walliser: 1988, "Infinite Regressions in the Optimizing Theory of Decision", in B. Munier, ed., Decision, Risk and Rationality, Dordrecht, D. Reidel, p. 435457. Plott, C.R.: 1973, "Path Independence, Rationality, and Social Choice", Econometrica, vol. 41, p. 10751091. Popper, K.R.: 1967, "La rationalité et le statut du principe de rationalité", in E.M. Claassen, ed., Les fondements philosophiques des systèmes économiques, Paris, Payot, p. 142150. Rabinowicz, W.: 1995, "To Have One's Cake and Eat It, Too", Journal of Philosophy, p.586620. Rescher, N.: 1982, "Choice Without Preference : A Study of the History and the Logic of the Problem of 'Buridan's Ass'", in Essays in Philosophical Analysis, Lanham, University Press of America, chap. 5. Ryle, G.: 1949, The Concept of Mind, London, Hutchinson. Samuelson, P.A.: 1938, "A Note on the Pure Theory of Consumer Behavior", Economica, vol.5, p. 6171. Schick, F.: 1986, "Dutch Bookies and Money Pumps", Journal of Philosophy, vol.83, p.112119. Schoemaker, P.J.H.: 1991, "The Quest for Optimality : A Positive Heuristic of Science?", Behavioral and Brain Sciences, vol. 14, p 205215; followed by comments by other authors, p. 215237; and "Author's Response", p. 237240. Schwartz, T.: 1972, "Rationality and the Myth of the Maximum", Noûs, vol. 6, p. 97117. Schwartz, T.: 1986, The Logic of Collective Choice, New York, Columbia University Press. Sen, A.: 1970, Collective Choice and Social Welfare, San Francisco, Holden Day. Sen, A.: 1971, "Choice Functions and Revealed Preference", Review of Economic Studies, vol. 38, p. 307317; 29,reprinted in A. Sen, 1982, chap. 1. Sen, A.: 1973, "Behaviour and the Concept of Preference", Economica, vol. 40, p. 241259; reprinted in A. Sen, 1982, chap. 2. Sen, A.: 1982, Choice, Welfare and Measurement, Oxford, Blackwell. Simon, H.A.: 1955, "A Behavioral Model of Rational Choice", Quarterly Journal of Economics, vol. 69, p.99 118. Simon, H.A.: 1976, "From Substantive to Procedural Rationality", in S.J. Latsis, ed., Method and Appraisal in Economics, Cambridge, Cambridge University Press. p. 129148; reprinted in H.A. Simon, 1983. Simon, H.A.: 1979, Models of Thought, New Haven, Yale University Press. Simon, H.A.: 1983, Models of Bounded Rationality, Cambridge, MIT Press. Slote, M.: 1989, Beyond Optimizing. A Study of Rational Choice, Cambridge, Harvard University Press. Sugden, R.: 1985, "Why be consistent?", Economica, vol. 52, p.167184. Tullock, G.: 1964, "The Irrationality of Intransitivity", Oxford Economic Papers, new series, vol. 16, p. 401 406. Tversky, A.: 1969, "Intransitivity of Preferences", Psychological Review, vol. 76, p. 3148. Tversky, A.: 1972a, "Choice by Elimination", Journal of Mathematical Psychology, 9, p. 341347. Tversky, A.: 1972b, "Elimination by Aspects. A theory of Choice", Psychological Review, 79, p.281299. Watkins, J.W.N.: 1970, "Imperfect Rationality", in R. Borger and C. Cioffi, eds, Explanation in the Behavioural Sciences, Cambridge, Cambridge University Press. Weber, M.: 1949, Max Weber on the Methodology of the Social Sciences, tr. and ed. by E.A. Shils and H.A. Finch, The Free Press of Glencoe, Ill. Winter, S.: 1975, "Optimization and Evolution in the Theory of the Firm", in R.H. Day and T. Groves, ed., Adaptive Economic Models, New York, Academic Press, p. 73118. 
URI:  https://mpra.ub.unimuenchen.de/id/eprint/37740 