Are People Rational (in the Economist's Sense) and Reasonable (in the Lawyer's Sense)?
Are People Rational (in the economist 's sense) and Reasonable (in the lawyer 's sense)?
Both concepts of rationality and reasonableness indicate a process of reasoning by anticipating and analysing the consequences of their potential actions and establishing a list of preferences, depending on the anticipated consequences. A rational person, having established their list of preferences, will choose the action which will maximise their utility. There are many different variations of rationality which will be outlined later in this essay. In order for a person to be rational their list of preferences must be complete and transitive as well as choosing the preference that maximises their utility. Ulen (1999) 'Consumers have transitive preferences and seek to maximise the utility that they derive from those preferences, subject to various constraints. ' A reasonable person will also analyse the consequences of their actions to create a list of preferences in a similar way to a rational person but they will also consider the welfare of others in their decision and adjust their list of preferences accordingly. In this essay I will look at how a variety of different factors, both direct and indirect will affect a person 's ability to act rationally, reasonably or in some cases both. I will also make a comparison between rationality and reasonableness in people and rational and reasonable corporations.
A purely rational person is completely self-interested and will only look to maximise their own preference function and will have no consideration for the welfare of others. Macesich (1997) '.....the economist 's concept of a rational person is one who seeks to maximize his or her own self-interest. His or her concern for the well-being of others is limited. The selfcentred drive produces outcomes in which private and social costs diverge. As a consequence, outcomes can conflict with society 's general interest. ' Pure rationality is present in only the minority of
Both concepts of rationality and reasonableness indicate a process of reasoning by anticipating and analysing the consequences of their potential actions and establishing a list of preferences, depending on the anticipated consequences. A rational person, having established their list of preferences, will choose the action which will maximise their utility. There are many different variations of rationality which will be outlined later in this essay. In order for a person to be rational their list of preferences must be complete and transitive as well as choosing the preference that maximises their utility. Ulen (1999) 'Consumers have transitive preferences and seek to maximise the utility that they derive from those preferences, subject to various constraints. ' A reasonable person will also analyse the consequences of their actions to create a list of preferences in a similar way to a rational person but they will also consider the welfare of others in their decision and adjust their list of preferences accordingly. In this essay I will look at how a variety of different factors, both direct and indirect will affect a person 's ability to act rationally, reasonably or in some cases both. I will also make a comparison between rationality and reasonableness in people and rational and reasonable corporations.
A purely rational person is completely self-interested and will only look to maximise their own preference function and will have no consideration for the welfare of others. Macesich (1997) '.....the economist 's concept of a rational person is one who seeks to maximize his or her own self-interest. His or her concern for the well-being of others is limited. The selfcentred drive produces outcomes in which private and social costs diverge. As a consequence, outcomes can conflict with society 's general interest. ' Pure rationality is present in only the minority of
References: Ulen, T S. (1999) 'Rational Choice Theory in Law and Economics ' 0700 Fundamental Concepts, pp. 790-818 Downloaded from: http://encyclo.findlaw.com/tablebib.html dated 13/11/2009 Macesich, G. (1997) 'The United States in the changing global economy: policy implications and issues ' Praeger Publishers Connolly, M. (1959) 'The Categorical Imperative ' Irish Quarterly Review, Vol 48(189), pp 84-97 Sen, A. (2004) 'Rationality and Freedom ' Oxford University Press Matthew (22:39) The Bible: English Standard Version (1971) Downloaded from: http://www.biblegateway.com/passage/?search=matthew %2022:39&version=ESV#en-ESV-23909 dated 20/11/2009 Sen, A (1994) 'The Formulation of Rational Choice ' The American Economic Review, Vol 84(2), pp 385-390 Sen, A. (1997) 'Maximization and the Act of Choice ' Econometrica, Vol. 65(4), pp 745-779 Binmore, K. (2005) 'Natural Justice ' Oxford University Press Llody, A. C. (1962) 'Natural Justice ' The Philosophical Quarterly, Vol. 12(48), pp 218-227