Rationality

From its inception in the marginal revolution of the 1880s, neoclassical economics has depended on the notion of a rational economic agent, a Homo economicus. Equally, the notion of rationality has been the focus of criticism from those wishing to dispute one or another aspect of mainstream economic thought. Lagueux (2010) provides an excellent introduction to the literature and the issues. Giocoli (2003, 2005) provides a detailed and highly readable account of the emergence of the neoclassical rational individual agent, in particular showing the supersession of the older conception of rationality as maximisation by the newer version of rationality as consistency. In the older presentation of the matter, the agent was a recognisably human individual attempting to optimise subject to constraints. In the later view, all that is left is consistency: “The major meaning of rationality is a condition of consistency among choices made from different sets of alternatives” (Arrow, 1996, p. xiii). In this view, rationality is defined by the existence of a preference relation which is complete and transitive. Giocoli's point is that both maximisation and consistency are requirements of rational behaviour seen from different perspectives – failure to maximise would be inconsistent and inconsistency would imply a failure to maximise. So the displacement of one by the other has been a development, not of the ‘body of science', but of the ‘image of science' of economics – how economics presents itself both to itself and to the rest of the world