Choice Behaviour: Looking for Remedy to Some Central Logical Problems in Rational Action

The purpose of this paper is to examine connections between rationality and rule following, and to propose that a distinction between consequential and procedural interests can help us in explaining choice behaviour in general. The limitations of Rational Choice theory have become increasingly established in economics. An alternative behavioural theory, Rule-Individualism, is assessed in the paper, with the conclusion that it fails in its attempt to provide a genuinely different perspective compared to Rational Choice theory. Hayek's theory of mind works as a bridge, connecting rule following, as a behavioural pattern, with contextual discretion. The central message in Hayek's book in the field of psychology, The Sensory Order, is that all types of action are fundamentally based on our ability to discern recurrent patterns. That is, all action is essentially rule-based. A question then arises about a potential explanation to the distinction between rule following and discretion at the observable level of individual action. Rational Choice theory is silent about this, and Rule-Individualism, it will be explained, is inherently inconsistent when dealing with the logic of rule following. This paper aims at offering a potential explanation which is not inconsistent or tautological. Copyright WWZ and Helbing & Lichtenhahn Verlag AG 2003.