The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Rationality, History of the Concept

  • Esther-Mirjam Sent
Reference work entry


This article offers a historical and methodological perspective on the concept of rationality. It gives an overview of the various interpretations of the notion, from self-interest to rational choice and expected utility to strategic rationality and rational expectations. It pays special attention to the ethical dimensions of the concept. The article further places rationality within a long-ranging discussion concerning the status of assumptions within economics. It explicitly considers efforts to test rationality directly. The article concludes with an evaluation of recent efforts to replace rationality with the notion of bounded rationality.


Adaptive control learning Adaptive expectations Arrow’s theorem Assumptions Bayes’ rule Bayesian learning Behavioural economics Bounded rationality Cairnes, J. E. Centipede game Chain store paradox Commitment Completeness of preferences Computation of equilibria Confirmation Error-term justification Ethics and economics Expected utility Falsificationism Folk theorem Friedman, M. Fundamental theorems of welfare economics Game theory Hutchison, T. Instrumental rationality Introspection Keynes, J. N. Learning Machlup, F. Microfoundations Multiple equilibria Muth, J. F. Nash equilibrium Nash program Neoclassical economics Neural network learning New behavioural economics Notrade theorems Perfect equilibrium Pluralism in economics Power Preference satisfaction Preferences Prisoner’s Dilemma Procedural and substantive rationality Rational behaviour Rational expectations Rationality Regret Repeated games Robbins, L. C. Satisficing Self-interest Senior, N. W. Simon, H. Social norms Strategic behaviour Subjective probability Sure-thing axioms Sympathy Testing Transitivity Verification Well-being 

JEL Classification

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Esther-Mirjam Sent
    • 1
  1. 1.