Home > Uncategorized > Rational choice theory …

Rational choice theory …

from Lars Syll

In economics it is assumed that people make rational choices

  1. October 19, 2016 at 12:45 pm

    What irrational actions/thinking does the picture depict? Why would those using the escalator consider this decision rational?

  2. Paul Schächterle
    October 19, 2016 at 4:19 pm

    LOL :)

    • October 19, 2016 at 8:08 pm

      I’m interested in the evolution of rational, not it’s correctness or necessity. We use this term as if it sprang into existence with the universe. As if rational is easily identified and easily applied. History shows neither is the case.

  3. October 19, 2016 at 4:46 pm

    The bottom guy appears to be walking up the escalator. He must be thinking that getting to the fitness center is time wasted so he is trying to get there as fast as possible. How he is able to do all the calculations in his head, weighing the cost of extra time taking the stairs, but getting the extra exercise versus saving the time on the escalator but getting less exercise, surely must be proof that he (we?) really are rational, utility maximizing, calculating wizards, just like neoclassical economics says we are! To paraphrase a famous economist, “It is somehow utility maximizing and rational choice working its magic.”

    • October 19, 2016 at 8:05 pm

      Or maybe the guy just can’t stand to go left, on anything. So he always moves to the right. That’s neither rational (in the Enlightenment sense of rational) nor utility maximizing.

  4. meredith edwards
    October 20, 2016 at 3:36 am

    A good one Maybe time poor?

  5. October 20, 2016 at 3:43 am

    or maybe he is climbing the mechanic stairs against it’s movement thus making an extra effort.

  6. October 21, 2016 at 1:45 pm

    So the point is, saying an action or decision is rational tells us nothing about that action/decision. Even saying it’s rational in the sense that term comes to us from the Western Enlightenment tells us little more, since the Enlightenment produced more debate about rationality (I mentioned Voltaire’s Candide in another post) than certainty. And the notion of rationality has grown more not less opaque over time. For example, clinical psychology doesn’t even attempt to define it. Preferring instead to focus on functional vs. dysfunctional behavior.

    • October 24, 2016 at 9:07 pm

      “So the point is, saying an action or decision is rational tells us nothing about that action/decision.”

      I think that is correct. And just maybe the brighter Neoclassical economists also realize this and thus their lack of interest in trying to theorize about the real world?

  7. Nihat Kentel
    October 24, 2016 at 3:36 pm

    Tha rationality or irrationality is really a controversial subject. What being rational can be found as totally irrational from another point of view. The irrationality here begins with an escalator, which has been built in the open air, subject to rain, snow etc. or with belief in selling this irrationality with the help of photoshop maybe. Maybe it is rational from another point of view, which is unknown to me.

  8. October 25, 2016 at 4:09 am

    The point of asking questions about rationality is so we can look for histories that helps us understand how the notions of rationality were invented and used. By whom was each invented, for what purposes? And sometimes we find the invention was accidental. There are multiple rationalities, thus multiple histories of rationality. Fascinating work. Rationalities are one of the ways the world emerges. They’re not the only way. But right now one or another rationality is involved in much of our daily lives. As social scientists our job is to do all we can to understand this and share our understandings with others. Recognizing all along that as social scientists we use multiple rationalities to do the job.

  9. October 25, 2016 at 9:25 am

    Congratulations to Nihat for really thinking outside the box: seeing the irrationality in the location of the escalator and not in the “keep-fitter” trying to climb it. That fits in with what Egmont and I have tried to say: he that economics is about the system’s structure and not behaviour, I by likening it to a television set where the science is the science of the communication system, not of the “supply and demand” you see on the screen. Ken, the same argument applies to us humans: the issue is not rationality but that our brains have four functions (input, linguistic memory, essentially visual memory and outputs) in which the language indexes the visual memory and rationality performs logic on the index rather than the data. As G K Chesterton put it forcefully when redefining “Orthodoxy” as reasonable (evidence based, imaginatively rather than linguistically interpreted) thinking rather than self-righteousness: it’s insane (literally unwhole) to have two sides to your brain and only use one of them. But that is exactly what academic as against practical training teaches us to do, as Bob Locke might be the first to agree.

    • October 25, 2016 at 10:47 am

      Dave and Egmont, your insistence that systems are somehow different from interactions (not behavior) is mistaken. Interactions, relationships are the process by which everything from civilization to bubble gum is created. Is invented. These interactions are not limited to humans. They include humans. But include also animals, mountains, forests, the Sun, the Moon, etc. Language is one of the things invented in these interactions. Just one of an expanding number of inventions. Systems are merely interactions. That is, what is generally called a system in merely a collection or congregation of interactions. In this sense, each human is a system, but so is the arrangement of cars in a car park. The work done by the brain is also the result of a congregation of interactions. In more familiar terms, the brain evolves, has evolved, will evolve. As for the fancy words like logic that seem to hold such sway with some folks, these too evolved and will continue to evolve. Such terms (language) are a continually evolving congregation of interactions. Experience shows that the ways the brain functions and how those functions are divided among the parts of the brain evolve, even over short periods of time. For example, damage in the areas that control language sometimes leads to others areas of the brain taking over those functions. The same with motor functions, emotions, and reasoning. Although the brain can be damaged so severely that such movement of functions becomes impossible. We’re also beginning to understand that the brain is not the only part of the human body that learns or controls actions, even language. There is “muscle knowledge,” for example And there is cell knowledge. In short, your picture of knowledge, learning, action, and understanding is just too restricted.

      • October 25, 2016 at 3:49 pm

        Ken, this response merely suggests you are one of the people who is only using the linguistic side of his brain.

        Don’t you tell me how brains work. As a physics-trained communications scientist, I’ve been studying brains, artificial intelligence and the evidence related to them for more than fifty years, both linguistically and imaginatively, since I had a left-handed child with speech difficulties due to cross-lateral sensing. That was resolved, as you suggest, by growing new connections via “performative” speech therapy, but if you knew anything about computers, you would realise processes in these, similar to those you mention, are happening all the time. I’ve not had to be told how brains and their various components work and interact: I’ve been in a situation where I could discover that for myself, even though others haven’t.

        You seem to have have no idea of how self-attraction creates particles and mutual attraction creates atoms and atoms form or can be formed into materials involving mutual attractions that can empower systemic actions (as in batteries), but are more often tangential to such actions and merely guide them. Like (to give you examples you are surely familiar enough with to imagine): like a river guides the flow of water through it or insulated wires guide electricity systemically through physical systems like television sets and brains.

        When Lewis Carroll had Humpty Dumpty saying that words meant what HE meant them to say, he wasn’t telling the truth: he was joking about an ambiguity which makes possible mistakes, lies and systematic dishonesty. If you want to insist that ‘system’ refers to a pattern in behaviour, I will argue that you are mistaken or worse, for that doesn’t account for the cause of it, whereas the system ‘as cause’ also accounts for the behaviour.

        Ken, I don’t want to put you down, because I appreciate your own work and background as a civil rights activist. But we are trying here to say something really important: about a more appropriate way of looking at not just economic behaviour but the system of communication via embedded mental rules which is guiding unacceptable economic and political behaviour. So, I will not put up with YOU putting ME down.

      • October 25, 2016 at 8:00 pm

        I’m not putting you down. But such simplistic and mechanical views as you express bother me, a lot. You’re talking like a pre-quantum, pre-chaos physicist. And your analogies make that situation even worse. That said, I agree with some of what you say. Brains (and other parts of the human body) evolve to meet new situations. And they do it all the time, not just in special cases of injury. But I hate the analogy of the brain as a computer. It’s not a computer, at least not in the sense of the computers that exist today. I think of the brain as one modality for humans in interacting with the world. But it’s not the only modality. It’s important in human interaction and evolution, but “humans in the world” cannot be reduced to the brain. As for words and meanings, Lewis Carroll is correct. Words, language evolves in interactions. Meanings, usage patterns, expectations, and presentation emerge from these congregations of interactions. In which you and I participate. I don’t know what you consider a system. But when we observe the organization of physical structures like the human body, institutions like churches, and linguistic patterns like languages we see they emerge from a history of interactions that goes on continually. System is as good a term as any to apply to such events. In the words of C. West Churchman, “The Systems Approach is not a bad idea.” Help me understand what you are getting at with your call for “… a more appropriate way of looking at not just economic behaviour but the system of communication via embedded mental rules which is guiding unacceptable economic and political behaviour.” I believe what I propose gets along the path to meeting this goal. You seem to disagree.

      • October 25, 2016 at 11:54 pm

        I do disagree, and your arrogance is beginning to astound me. You judgmentally assert that the views I express are “simplistic and mechanical views”, that I’m “talking like a pre-quantum, pre-chaos physicist”, when it is me, not you, that over sixty years ago was grappling with quantum semiconductor physics and experimental generation of chaos: making audio amplifiers howl with positive feedback.

        You say you “think of the brain as one modality for humans in interacting with the world”, which if your ‘mode’ is not mere bombast means something like actions having the form of the transmission of neural impulses, abstracted from the virtually static neuronal cell walls which channel and thereby direct them. I think of the brain as an active sub-system in an economic system of functional communications: itself a system having not just activity but channels guiding its internal activities, choices and external interactions.

        You say you “hate the analogy of the brain as a computer. It’s not a computer”; ignoring the reality that a computer, like a brain, is not a “simplistic” Newtonian mechanism but a network of channels directing activity to perform different functions (including, like a body, operating itself) by memorising, energising, connecting and disconnecting appropriate sub-circuits. At the quantum physics level almost the only difference apart from the material forming the channels is that a brain’s operating system consists of chemical structures (which switch on particular programs via the emotions) rather than circuit programs; the analogy can, however, be maintained with holographic memory, in which different patterns appear at different frequencies of illumination.

        I don’t know why I am bothering to explain this to you: perhaps in the hope it may help others get back on the path you seem to have have tried to divert us from. Help you understand what I am getting at”? I don’t know if that is possible unless you try to use your imagination, for I have already explained it by likening the economic system to “a television set, where the science is the science of the communication system, not of the “supply and demand” you see on the screen”. Would you seek to understand how a television works, and how it was possible to have different channels and for digital tv to work better, by looking in the guide to what’s on this week?

        Okay then, economists, like the rest of us, may for practical reasons need to study localised supply and demand, but as economists, they should be more interested in the science and mathematics of the problem of accommodating and harmonising the phases and timescales of multiplexed linguistic and visualizable activities: the unstudied central problem created by economic diversity, but one which has long been resolved in the science of communication and servo control systems.

      • October 26, 2016 at 3:15 am

        Dave, I know nothing about your personal history. I can only respond based on what you say on this blog. I repeat, in my view you talk like a pre-quantum, pre-chaos physicist.

        Your second paragraph tells me something new about your positions. You’re a structural-functionalist. Chemical structures or electric circuits all performing their functions for the good of the system. That’s about as 19th century as you can get.

        A friend who has worked in AI for nearly 30 years always tells the same joke to comments about computers being like the brain or the human “system.” Joke: Why does a computer never forget? Because it never remembers. His point as he’s explained to me 100 times is that computers don’t know or understand anything. They simply process data. Humans know and understand. Part of that process is the brain. AI he says is about duplicating this process, not the data processing.

        In your words, you liken “… the economic system to ‘a television set, where the science is the science of the communication system, not of the “supply and demand’ you see on the screen.” I understand this analogy. I just strongly disagree with it. What is it we’re trying to understand? The “communication system” that in your view has all the chemical structures and circuits that make the economy do what it does? Or the economy where people exchange not just communications but actual resources. This is the question philosophers have been debating for millennia. Is the human being more than or just the sum of her/his parts? Is the universe just a series of connected structures?

        Finally, a question. When the science of communication and servo control systems fails to reveal and improve our understanding of economic activities, which will you then reject. The science of these systems or the actions of economic actors you observe. In the words of a great country song, who you gonna believe, me, or your lying eyes? In this case the me is the science you propose. I’m not dismissing totally the route you propose. I think it can be useful. But I believe it’s an error to focus on it to the exclusion of other approaches to the study of economic activities.

      • October 26, 2016 at 11:44 pm

        Ken, I’ve spent several hours composing an answer to your hostile criticism and misrepresentation – more like that of counsel for the prosecution rather than a defence lawyer trying to help his client articulate his position – but I’ve lost the lot, seemingly by pressing the control instead of the shift key.

        I’m therefore simply going to say that if you know nothing of my background, that shows you don’t read what I keep explaining. Contrary to your assumption, the science of communication and servo control systems has NOT failed to reveal and improve MY understanding of economic activities. NOR does it exclude other approaches to the study of other activities: it simply sets them in a context which enables one to evaluate them. It is structural-functional, yes, but linguistic functions are neither mechanically invariant nor (given the possibilities of lies and misunderstandings) necessarily for the good of the system

        “What is it we’re trying to understand?” The need for and possibility of paradigm change. That economists with a mechanistic opposing forces 17th century understanding of science have, to paraphrase A N Whitehead, “got hold of the wrong end of the stick”, and that 20th century communication science, based on the ability to measure information capacity as “differences which make a difference”, is the other end of the stick. Remembering this discussion is about the difference between rationality and reasonableness, here’s Whitehead:

        “The art of reasoning consists in getting hold of the subject at the right end, of seizing on the few general ideas that illuminate the whole, and of persistently organising all subsidiary facts round them. Nobody can be a good reasoner unless by constant practice he has realised the importance of getting hold of the big ideas and hanging on to them like grim death”.

        Adam Smith got hold of the stick at the money-making rather than the human end and seen the few general ideas which illuminate that (like value-weighing scales at equilibrium, hence opportunities for grossers to lighten weights, clip coins and blame grocers). Economists who have persistently organised all subsidiary facts about this have excluded humanity and ended up with rationalisations for deliberate error rather than reasons grounded in reality.

        I’ve started from the human end with a 20th century communication science whose raison d’etre was detection and correction of errors, and ended up with a place for everything by definition, and everything fitting nicely in its place (including economics and good reason to exclude money-making from it).

        But this is a blog, not a text-book, academic thesis or scientific monograph. Without diagrams, I cannot present, justify, develop and explain the significance of my schematic map of ‘evolution to date’, only refer to it and describe its form. I am reduced to offering familiar examples of how information science led to definition of obviously successful means to variable ends, whereas 17th physical science foundered by focusing on specific ends: either denying or taking for granted honesty, causation, communication and action at a distance.

        “This is the question philosophers have been debating for millennia”, you say. “Is the human being more than or just the sum of her/his parts?” More than, of course, for their being includes actions within and between these parts, changing relationships within and between them, notably including digestion, distribution, storage and reactivation of power sources and information sensors, with autonomous pre-processing and “error-correction” activities keeping side effects on the internal environment within safe limits.

        What the philosophers haven’t got round to debating is the relationship of logical quantification and those four phases of activity to the “always, present, past and future” phases of time, such that electronic systems can be reduced to just four types of component, stability control to aims and PID feedbacks, and brains as well as computers to four different functions: I/O, high speed processor, low speed memory and and largely autonomous operating systems dealing with errors, prioritising operations and synchronising time sharing.

        Before my experiments using Algol-68’s references in efficient “object-oriented” data processing, in effect manipulating indexes rather than the large data objects they referred to, perhaps only G K Chesterton had realised how the left brain manipulates words indexing large visual images stored in the right brain. Of G F Watts’ picture ‘Hope’, he wrote: “The picture is inadequate; the word ‘hope’ is inadequate; but between them, like two angles in the calculation of a distance, they almost locate a mystery: a mystery that for hundreds of ages has been hunted by men, and evaded them”.

        [NB. the explanation of consciousness hinges on right brain images being encoded as sense-refocussing programs].

        What can I expect from you in respect of all this? Taking as indicators my experience of you, and about 70% of Americans being right handed and politically conservative, I expect you to even more efficiently process my words by skimming rather than reading them, reacting sceptically to phrases taken out of their context, but not using your eyes and imagination to visualise and explore the significance of what is being said, so not seeing the contexts in which it rings true and perpetuating the unjustified assumption that it never does.

        When you have nothing worth saying it is best to say nothing. Or to ask exploratory rather than sceptical questions.

  10. October 27, 2016 at 3:41 am

    Nothing I said was hostile. Firm disagreement, yes. If you can’t handle that perhaps you should take up another profession, avocation, or both.

    I’ve read carefully your comments. I react to them as I consider any others. I ask questions and try to state my conclusions based on a look (if only partial) at the roots of what you say. What follows is that. Don’t know if it’s nothing. It depends on who’s reading it.

    Interesting comments on “the science of communication and servo control systems.” You don’t use it to the exclusion of other approaches. You just evaluate those other approaches in terms of it. Six of one, half a dozen of the other. Communications and servo control theories are just dressed up feedback models. These models (call them theories if you like) are no different than any other. They all fail for a simple reason. The complexity of actual events and actors cannot be captured in any theory or model. That’s why the models/theories fail. That’s why they will always fail. Besides the failure is productive. It leads to changes in our efforts to understand and describe.

    How many ways are there to “measure” information capacity? And how do we figure out that differences make a real difference. Multiple approaches to both. How do we choose among them?

    You discuss a paradigm shift, a la Kuhn, I assume. Kuhn uses the term paradigm to denote a framework of concepts, results, and procedures which provide a firm but flexible guide for the work of scientists within a branch of science. This a bit different from the traditional use of paradigm as exposing or opening some pathways or thoughts while blocking others. Kuhn also contends that “the successive transition from one paradigm to another via revolution is the usual developmental pattern of mature science.” But he also points out that in his view the shift from one paradigm to another is irreversible (since the very basis of science, rationality, and proper reasoning changes from paradigm to another). More simply, science, rationality, and reasoning evolve. They don’t have, have never had a fixed form or objective. Whitehead was a process philosopher, at least in part. Process philosophers regard change as the cornerstone of reality. So, the “right end of the stick” and the “big ideas” in the quote you cite are not fixed. They change as paradigms, cultures (physical and linguistic) change. And these have always changed.

    On Smith, I think your conclusions are incorrect. I don’t think Smith emphasized money-making to the exclusion of other human activities and goals. Smith, I think assumed that the money-making way of life he described could only exist and survive within a social-moral order that guided the actions of people. The fact that capitalists and economists have sought and still seek to destroy and/or control this order can’t be blamed on Smith. Any more than capitalists’ and economists’ usurpation of Smith’s writings for this work can be blamed on Smith.

    • October 27, 2016 at 9:24 am

      So I have to accept that as a lawyer you have become expert in putting people down, and have become so used to hostility that you don’t recognise it when you see it, even if you could see it in yourself.

      Describe to me any experience you have had as a revolutionary scientist being put down by normal scientists, which might give me some reason to accept you could know what you were talking about (not what you’ve heard said) when you pontificate about science.

      After sixty years’ scientific experience of and philosophical reflection on science and scientists, I’ve reached the conclusion that theories merely tell one where to look, but as Whitehead implies, they can get you looking in the wrong place. (Revolutionary science began with Galileo’s telescope, normal science with the microscope. Your evolutionary theory explains the origin of species, mine goes back to the much rarer origin of genuses). Whitehead himself started process theory, but I myself discovered the explanation of stable particles in the concept of recursive processes localised in the manner of a snake eating its own tail – an eastern image my esteemed mentor G K Chesterton had earlier ridiculed. Of course I don’t blame Smith for all the evils of capitalism, but they are the outcome of his concept of economics being about the wealth of nations.

      Are you man enough to actually learn about these extraordinarily significant issues from someone who really does know what he is talking about?

      • October 27, 2016 at 10:02 am

        This is getting weird. So I think we better cut this off now. Be happy. All the best.

      • October 27, 2016 at 4:55 pm

        Thank you, and good. At 80 I don’t need to look for another job. I need to share the “big ideas”, systems analyses, discoveries and successful innovations I’ve been involved with which are relevant to the real world’s need for a more human and less destructive economic system, neither wasting time arguing about their legitimacy nor leaving them buried in torrents of ill-informed disagreement. I respectfully hope that in future you will allow them to be heard.

      • October 27, 2016 at 6:57 pm

        I’m only 70 and I still work everyday with clients. Frankly, I don’t believe you’ll get where you say you want to go with the approach you’ve chosen. But best of luck.

      • October 29, 2016 at 10:40 am

        Belatedly, why don’t you believe? It takes two to tango, and when everybody else wants to waltz, of course I need ;luck; but one can persist in hope.

  11. October 28, 2016 at 1:05 pm

    So Ken’s 70 and still working in the monetary economy, whereas I’m 80, and having been given a pension, am still working in the gift economy. This illustrates what Dave Elder-Vass pointed out in a paper I read last night: that both economies are present in the real world, despite the TINA (there is no alternative) assumptions of money-system economists.

    We can humorously translate this back into Lars Syll’s picture of the “keep fit” academy. The world needs to get fitter; stairs (giving) and escalators (money power) exist side by side, so we can choose between them. People used to powered escalators evidently take them for granted, for Lars has shown no-one on the stairs; yet we have already seen how rational choice ends up in paradox. Perhaps the only things we can definitely say are that one cannot be on the stairs AND the escalator, go up and down at the same time, or come down without going up. However, we can do any of these on different occasions, so we not only have a choice between them, we can vary our time-sharing between them.

    The paradox remains: that only when we have the choice can we see whether the escalator is going up or down. The evidence, though, shows that since installing the escalators gave us the choice, our fitness has come down to the point where the escalators will fail for lack of maintenance and the stairs because we cannot share out unplanted harvests.

    Is it reasonable to suggest inverting the analogy: giving our kids, old folk and the ailing lifts on the escalators until they get fit enough to join us in the hard work of climbing the stairs – planting seeds and reaping harvests – on occasions when we can?

  12. Franklin C
    December 23, 2016 at 2:47 pm

    The biggest lie that economics is founded on

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