Bayesian rationality is the paradigm of rational behavior in neoclassical economics. A rational agent in an economic model is one who maximizes her subjective expected utility and consistently revises her beliefs according to Bayes's rule. The paper raises the question of how, when and why this...

The book explores the evolution, through the first half of the 20th century, of the key neoclassical concept of rationality. The analysis begins with the development of modern decision theory, covers the interwar debates over the role of perfect foresight and analyses the first game-theoretic...