Reason and Rationality

By G. Callahan. 2008

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The second element of the fundamental assumption is that every individual acts rationally in making choices to maximize his or her self-interest. This “rationality principle” (as Popper has called it) is a foundation of mainstream economics and a canonical hypothesis of economic theory (Kreps 1997, 59).1 In Milton Friedman’s words: the assumption takes “pro‹t maximization as a central element and treats human beings as rationally directed toward the maximization of pro‹t” (1983, 172–73). The assertion that people always act rationally is taken by many theorists to be an axiom, that is, more than an assumption, in Aristotle’s de‹nition, “a proposition that neither can nor need be proved.” Further, “Axioms . . . constitute claims about this world so widely agreed as to make further argument unnecessary (Hahn 1985, 5). This canonical hypothesis (assumption or axiom) when it is analyzed asserts that:

Subfields: General Decision Sciences

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