Edited by Richard Arena and Agnès Festré
Chapter 8: Utility or Rationality? Restricted or General Rationality?
8. Utility or rationality? Restricted or general rationality? Raymond Boudon 8.1 INTRODUCTION Two eminent Nobel Prize-winning economists, Herbert Simon and Gary Becker, have made important contributions that extend the explanatory power of the Expected Utility Model (EUM). Simon suggested decision makers will accept decisions they perceive to be satisfying, relegating the search for optimal decisions only to particular situations. Given that information is generally costly, rather than aiming to gather all the information required to make a fully rational decision, decision makers make use of a bounded rationality approach. This idea has deeply inﬂuenced the social sciences. Moreover, Gary Becker showed that actors’ preferences can be treated as endogenously generated by earlier behaviour rather than be taken as given. In his Accounting for Tastes (1996, Chapter 1, paras 1, 3–4), he claimed that the EUM was an alternative to the causal approach used in the social sciences, and one in which behaviour was explained by psychological, cultural or biological forces. He also contended that this alternative approach had much greater explanatory power than its causal counterpart. While I agree with this latter point, I will try to show that the EUM and the causal approach do not exhaust all the possible ways of explaining individual behaviour. A third approach puts forward the idea of seeing individual behaviour as basically rational, while at the same time broadening the deﬁnition of rationality used by the EUM. This approach has a greater explanatory power than the EUM and will be...
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