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New Challenges to the Rationality Assumption

Published online by Cambridge University Press:  16 February 2009

Daniel Kahneman
Daniel Kahneman
Affiliation:
Princeton University
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Extract

In contrast to logical criteria of rationality, which can be assessed entirely by reference to the system of preferences, substantive criteria of rational choice refer to an independent evaluation of the outcomes of decisions. One of these substantive criteria is the experienced hedonic utility of outcomes. Research indicates that people are myopic in their decisions, may lack skill in predicting their future tastes, and can be led to erroneous choices by fallible memory and incorrect evaluation of past experiences. Theoretical and practical implications of these challenges to the assumption of economic rationality are discussed.

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Articles
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Legal Theory , Volume 3 , Issue 2: Special Issue: Rationality , June 1997 , pp. 105 - 124
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Copyright © Cambridge University Press 1997

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