Rationality

This chapter is a very compressed review of the neoclassical orthodoxy on the nature of rationality on economic theory. It defends the orthodoxy both against the behavioral criticism that it assumes too much and the revisionist view that it assumes too little. In places, especially on the subject of Bayesianism, the paper criticizes current practice on the grounds that it has gone astray in departing from the principles of its founding fathers. Elsewhere, especially on the modeling of knowledge, some new proposals are made. In particular, it is argued that interpreting counterfactuals is not part of the function of a definition of rationality.