Interpretations and Theoretical Uses of the Concept of Rationality in Economics

Abstract

Economic theory has focused on trying to account for the behavior of agents and the results that such performance will have in aggregate terms. Using several assumptions theory has come to build agent archetypes, in search for the most appropriate and possible representation for such behavior. One of the least analyzed but fundamental assumptions are related to the rationality. This term has had different definitions. At first it was treated as a simple capability of reasoning, then it gradually turned into the idea of a gifted agent able to construct sophisticated models in his/ her mind (hyper-rational), to finally result in the idea of a social construction process (procedural rationality). This paper aims to briefly explain each interpretation, as well as to describe the theoretical implications for each one, arguing that it is a fundamental assumption which must be explained even more clearly than it has been so far.