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By Michel VERLAINE, ICN Business School
The notion of rationality and rational decision-making are obviously important to understand the economic system. Economics can be viewed as the application of Rational Choice Theory to different kinds of social problems. This, however, poses the delicate question of what rationality actually is. The topic is complicated and it has led to a broad literature in Decision Theory. The book on Theory of Decision under Uncertainty by Gilboa in 2009 provides a good overview from a purely decision-theoretic viewpoint. The problem with this literature is that it focusses on decision-making axiomatizations and generalizations of decision-making models such as Expected Utility with not much focus on empirical behaviour.
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