21 Pages Posted: 19 Sep 2013
Date Written: September 2013
The standard theory of rational choice in economics considers an agent's choices to be rational if and only if the agent makes her choices in different choice situations on the basis of a fixed preference ordering defined over the set of all possible options. This implies that a rational agent's preferences cannot be context-dependent. This paper outlines a simple framework for defining context-dependence of preferences and for discussing relationships between context-dependent preferences and the notion of rationality.
Keywords: rationality, preference, context-independence, context-dependence, standard theory
JEL Classification: D01, D11
Suggested Citation: Suggested Citation
Pattanaik, Prasanta K. and Xu, Yongsheng, Rationality and Context-Dependent Preferences (September 2013). Andrew Young School of Policy Studies Research Paper Series No. 13-13. Available at SSRN: https://ssrn.com/abstract=2327260 or http://dx.doi.org/10.2139/ssrn.2327260