Presentation on theme: "Rationality Philosophical concepts of rationality"— Presentation transcript:
1 Rationality Philosophical concepts of rationality Instrumental vs. Principled rationalityUtilitarianismEconomics and rational choiceAssumptions and ambitions of rational choice theoryGame theoryBounded rationality
2 Definitions Reason Cognition Logic Rationality The intellectual ability to apprehend the truth cognitively, either immediately in intuition, or by means of a process of inference.CognitionThe portion of human experience comprising thought, knowledge, belief, and inference (as opposed to sensation, volition, or feeling).LogicBranch of philosophy concerned with the distinction between correct and incorrect reasoning. It commonly comprises both deductive and inductive arguments.Rationalitythe quality of being consistent with or based on logicthe state of having good sense and sound judgment; "his rationality may have been impaired"; "he had to rely less on reason than on rousing their emotions"
3 Rational behaviourA theory of rational choice presupposes that choices can be influenced by reasonThat implies thatnot only are we reasoning beingspossessing cognitive abilitiesapplying principles of logic (deduction/induction) to comprehend the worldbut also do we let reasoning guide behaviour/decisions/choicesIn that sense, RC theory proposes that reasoning is not an abstract human ability, but applied in behaviour, which allows behaviour to be explained and predicted
4 Instrumental rationality David Hume ( )”Reason alone can never be a motive to any action of the will””reason is, and ought only to be the slave of passions”Instrumental view of rationalityHuman actions/choices are ultimately driven by passions, desiresAction determined by psychological statesRationality of action consists of acting in a way that promises to achieve the desired goalPassions or desires themselves cannot be irrationalOnly irrational if based on false judgment, and then the judgment is the irrational element, not the evoked passionIrrational can be the choice of means to satisfy the passion/desire
5 Principled rationality Immanuel Kant ( )Hypothetical imperativesEffectively Humean instrumental rationalityIf you want to achieve Y, and this can only be accomplished by the course of action X, then it is (instrumentally or hypothetically) imperative to do XCategorical imperativesDo X regardless of your wantsReasoning about what actions to take requires that we conceive of ourselves as able to determine our actions autonomouslyPassions are alien influences that should not affect our reasoningCategorical are imperatives recognised by any agent possessing the faculty of reason”Act only on that maxim which you can at the same time will that it should become a universal law”
6 Utility Jeremy Bentham (1748-1832) Principle of utility ”approves or disapproves of every action whatsoever, according to the tendency which it appears to have to augment or diminish the happiness of the party whose interest is in question”Utility: property of an object to produce benefit, advantage, pleasure, good, happinessConsequentialism: rationality of action is determined by the results those actions provideAllows for reason to override passion, if long-term balance of happiness is maximised by foregoing current passionate urgeSocial choices (utilitarian principle of justice)A social state is preferable to another if it provides a net increase in utility for the members involved (more tend to gain than to lose)
7 Economics and rational choice Marginal utility theoryMathematical modelling of utility functionsMaterial self-interest as psychological underpinning of theories of market and consumer behaviour (Homo economicus)Vilfredo Pareto ( )Pareto optimalityThin rationality: Utility as a mere representation of preference-orderings”The theory of economic science thus acquires the rigour of rational mechanics; it deduces its results from experiences, without bringing in any metaphysical entity”Revealed preferences: observed choice as indicator of reasoning behind choiceExpected utility
8 Core assumptions of RC Utility maximisation Consistency Goals and preferences are exogenous (given); utility is the property of different courses of actions, i.e. their likelihood to achieve goalsConsistencyRank-order of preferencesTransitivity (if A is preferred over B; and B preferred over C; then A must also be preferred over C)Expected utilityChoices are made under uncertaintyThe calculus of choice not only entails the consideration of preferences over a set of options, but also consideration of the relative likelihood of an action producing the desired outcomeRadical individualismCollective action is nothing more than ”the action of individuals when they choose to accomplish purposes collectively rather than individually” (Buchanan and Tullock, 1962)
9 Explaining the world Rational choice theory Universal: aims to explain all economic, social and political outcomes as caused by intentional acts of individualsDeductive: deriving law-like statements, predictions, explanations from theoretical axioms (whereas inductive theories aim to derive generalities from observation of many comparable occurrences of events)Deterministic: search for equilibria (given institutional structures and preference orderings, outcomes are causal consequences)Positivist: explaining what is, not explicating what ought to beParsimonious: (high-leverage theory) aiming at universal explanations on the basis of few assumptions, little complexityLack of realism: (thick or thin) rationality assumed to be dominant if not sole driving force of human behaviour; also assuming homogeneity between individuals; perfect informationTheoretical legitimacy derived from predictive power: modelling the world AS IF everyone were a ulitility maximiser
10 Game theory Neumann/Morgenstern Game theory defines rationality as The Theory of Games and Economic Behaviour (1944)Game theory defines rationality asMaximising expected utilitiesBased on concept of instrumental rationalityBut contingent upon other player’s strategiesModelling how individuals interact directly, and not through marketsGame theory shows choices are constrained by the behaviour of others, and how rational strategies can lead to suboptimal, perverse outcomes
11 The Prisoner’s dilemma Assume two burglars, Al and Bob being capturedGiven two options by policeConfess and implicate the other in the burglaryDon’t confessOutcomesIf both confess, implicating the other, both get 10 years in jailIf neither confesses, each gets 1 year in jailIf one confesses, implicating the other, and the other does not, the confessors goes free, the other gets 20 years in jailDominant strategy is for both to confessPerverse outcome; 10 years for eachNash equilibrium: no one can gain from changing strategyApplications:Hobbes’ social contract theoryRealist paradigm in international relationsIsraeli-Palestine conflict
13 Collective action Mancur Olson (1965) ”The Logic of Collective Action”Predominant view that he challenged:Organized groups are basic units of politicsGroup membership and participation based on shared values and beliefsSociological explanations of political processesRational choice approach to collective actionRadical individualismRequirement of separate and selective incentives to engage individualsGroups do not have preferences, neither do states or society; all of these are just machines allowing collective action to take placeProblem of free-riding
14 Bounded rationality Herbert Simon (1916-2001) →Reasonable choice “if we take into account the limitations of knowledge and computing power of the choosing organism, then we may find it incapable of making objectively optimal choices. If, however, it uses methods of choice that are as effective as its decision-making and problem-solving means permit, we may speak of procedural or bounded rationality, that is, behaviour that is adaptive within the constraints imposed both by the external situation and by the capacities of the decision maker.”→Reasonable choiceSubstantive rational choice“we need to know only the choosing organism's goals and the objective characteristics of the situation. We need to know absolutely nothing else about the organism”Procedural/bounded rational choice“we must know the choosing organism's goals, the information and conceptualization it has of the situation, and its abilities to draw inferences from the information it possesses. We need know nothing about the objective situation in which the organism finds itself, except insofar as that situation influences the subjective representation”
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