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Perfect rationality
 
 
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In economics
Economics

File:Ballard Farmers' Market - vegetables.jpgEconomics is the Social sciences that studies the Production theory basics, Distribution , and Consumption of Good and Service ....
 and game theory
Game theory

Game theory is a branch of applied mathematics that is used in the social sciences , biology, engineering, political science, international relations, computer science , and philosophy....
, the participants are sometimes considered to have perfect rationality: that is, they always act in a way that maximizes their utility
Utility

In economics, utility is a measure of the relative satisfaction from, or desirability of, consumption of various goods and services. Given this measure, one may speak meaningfully of increasing or decreasing utility, and thereby explain economic behavior in terms of attempts to increase one's utility....
, and are capable of arbitrarily complex deductions towards that end. They will always be capable of thinking through all possible outcomes and choosing the, to them apparently, best possible thing to do.

Economic rationality is distinct from superrationality
Superrationality

The concept of superrationality is due to Douglas Hofstadter, in his article series and book "Metamagical Themas". Superrationality is a type of rational decision making which is different than the usual game-theoretic one, since a superrational player playing against a superrational opponent in a prisoner's dilemma will cooperate while a gam...
 in that it predicts that rational players will always follow a dominant strategy, that is, players never take into account how their decision will be echoed by others when making up their minds.






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In economics
Economics

File:Ballard Farmers' Market - vegetables.jpgEconomics is the Social sciences that studies the Production theory basics, Distribution , and Consumption of Good and Service ....
 and game theory
Game theory

Game theory is a branch of applied mathematics that is used in the social sciences , biology, engineering, political science, international relations, computer science , and philosophy....
, the participants are sometimes considered to have perfect rationality: that is, they always act in a way that maximizes their utility
Utility

In economics, utility is a measure of the relative satisfaction from, or desirability of, consumption of various goods and services. Given this measure, one may speak meaningfully of increasing or decreasing utility, and thereby explain economic behavior in terms of attempts to increase one's utility....
, and are capable of arbitrarily complex deductions towards that end. They will always be capable of thinking through all possible outcomes and choosing the, to them apparently, best possible thing to do.

Economic rationality is distinct from superrationality
Superrationality

The concept of superrationality is due to Douglas Hofstadter, in his article series and book "Metamagical Themas". Superrationality is a type of rational decision making which is different than the usual game-theoretic one, since a superrational player playing against a superrational opponent in a prisoner's dilemma will cooperate while a gam...
 in that it predicts that rational players will always follow a dominant strategy, that is, players never take into account how their decision will be echoed by others when making up their minds. Economic and game-theoretic rationality is completely individualistic.

See also

  • Rationality
    Rationality

    Rationality as a term is related to the idea of reason, a word which following Webster's may be derived as much from older terms referring to thinking itself as from giving an account or an explanation....
  • Rational choice theory
    Rational choice theory

    Rational choice theory, also known as rational action theory, is a framework for understanding and often Model social and economic behavior....
  • Superrationality
    Superrationality

    The concept of superrationality is due to Douglas Hofstadter, in his article series and book "Metamagical Themas". Superrationality is a type of rational decision making which is different than the usual game-theoretic one, since a superrational player playing against a superrational opponent in a prisoner's dilemma will cooperate while a gam...
  • Homo economicus
    Homo economicus

    Homo economicus, or Economic human, is the concept in some economic theories of humans as Rationality and broadly self-interested actors who have the ability to make judgments towards their subjectively defined ends....
  • Bounded rationality
    Bounded rationality

    Some models of human behavior in the social sciences assume that humans can be reasonably approximated or described as "rationality" entities . Many economics models assume that people are on average rational, and can in large enough quantities be approximated to act according to their preferences....
  • Dynamic inconsistency
    Dynamic inconsistency

    In economics, dynamic inconsistency, or time inconsistency, describes a situation where a decision-maker's preferences change over time, such that what is preferred at one point in time is inconsistent with what is preferred at another point in time....