Classical economics make use of the concept of the rational agent, how true is this?


I want to be clear here. An agent is rational if his motivations can be rationally explicable whether we can deduce them or not, or whether she herself is aware of them or not.

Its a fundamental assumption to make. But I'm wondering philosophically, just how true this is. Can anyones motivations be so reduced?

It's the kind of assumption that one makes in physics, and it seems to have been spectacularly successful there. It seems to me that this supposition has been historically imported from that direction. Is this true?

To me, its more like a useful working hypothesis, to see what can be further deduced, than having any truth value itself

Mozibur Ullah

Posted 2012-12-02T15:32:45.613

Reputation: 1

"…whether we can deduce them or not." This sentence is incomplete. Deduce from what? – DBK – 2012-12-02T19:50:05.917

@DBK:From their behaviour? Their own-professed motivations if they are inclined to trust you? – Mozibur Ullah – 2012-12-02T20:27:58.797



Your question refers to the domain of rational choice theory (RCT). Many leading figures in economics, e.g. the neoclassical school of Milton Friedman, advocated the use of unrealistic assumptions in economic theory. But there's also a lot of opposition within economics.

However, as far as I can see, what is under discussion is not the unrealistic status of these assumptions, but their role and their necessity. None of the participants in the dispute question that unrealistic assumptions are, in fact, unrealistic.

An interesting historical case study is Roy Harrod's formulation of the first modern model of economic growth (1939) and subsequent criticism by Robert Solow (1956) and Joan Robinson (1956). Harrod's model contains some interesting unrealistic assumptions, among them its aggregate production function, which was criticized as "unrealistic" by Robinson. In turn, the discussion between Robinson and Solow also concerned the need of unrealistic assumptions and is known today as the Cambridge capital controvery.

In the social sciences, Pierre Bourdieu's critique of RCT's homo oeconomicus has had some impact.

More generally, the underlying point of your question is the role unrealistic assumptions and false models play in science and the in social sciences.

Here are some links to continue


Posted 2012-12-02T15:32:45.613

Reputation: 5 212

I need to rethink/clarify the question a bit, I'm well aware that proponents of certain theories understand that hypotheses stated are in fact unrealistic; for example newton himself was well aware of the deficencies of his calculus, but went on to use it successfully, or that gravity acted at a distance which on reflection is unrealistic. – Mozibur Ullah – 2012-12-03T02:47:43.433

But then these assumption were modified, einstein showed how there was no action at a distance, the curvature of the spacetime fabric is experinced as gravity. I guess my real question should be, if humans have both a rational & irrational side to them, is that now taken into account? – Mozibur Ullah – 2012-12-04T18:54:22.973

Galbraith in his polemic the 'The Great Crash' showed how human/crowd psychology played an important part in business cycles/bubbles, which is underplayed by spokesmen of the industry, which surely have an interest in overplaying the rational underpinnings of their science. – Mozibur Ullah – 2012-12-04T18:56:54.330