Original scientific paper

Some Problems with the Rational Economic Man

Vojmir Franičević ; Faculty of Economics, University of Zagreb

Abstract

The concept of rationality in neoclassical economic theory is analyzed in this paper. Maximizing behavior of economic agents is possible only under some assumptions concerning information availability and agents’ cognitive capabilities. In the (more realistic) case, when they are missing, an alternative assumption is required: agents have limited capabilities and it is uncertainty that fundamentally determines the context of their decision-making. The "bounded rationality" concept is analyzed. It is shown that it can be integrated in the basic neoclassical model, but reinterpreted in an institutionalist direction, too. The institutionalist interpretation stresses the typical inability of economic agents to process all available information: therefore the agents’ rationality is an adaptive one, while a model of an optimizing agent is rejected. In such an approach institutions are endogenous to decision-making processes. Their informational role in the complex environment faced by agents is especially stressed. Understanding the institutional dimension is crucial for a reconstruction of economic theory founded on more realistic assumptions about economic agents themselves. In this way doors are also opened for a productive dialogue with other social sciences.

Keywords

neoclassical economics; economic actor; rationality; maximization; limited rationality; adaptive rationality; institutional economics

Hrčak ID:

154569

URI

https://hrcak.srce.hr/154569

Publication date:

31.12.1995.

Article data in other languages: croatian

Visits: 1.384 *