The Rationality Dialogy Between Economics and Psychology

Abstract

Economics and psychology take distinct approaches to predicting and formalizing human behavior. Economics focuses on the normative view of rationality, while psychology emphasizes the descriptive nature of rationality. This article reviews models of rationality related to understanding human decision making, including notions of complete rationality, bounded rationality, and ecological rationality. By examining the aims and functions of such rationality models, the author wishes to draw attention to the utility of ecological rationality and adaptive rationality approaches in a unified theoretical model for understanding human rationality. The ecological rationality approach evaluates not only by performance, but more importantly by how well the behavior fits the individual’ s environment. The adaptive rationality approach completes this model by additionally incorporating changes to the environment.

Keywords

• rationality debate
• bounded rationality
• ecological rationality
• adaptive rationality