Rationality and Context-Dependent Preferences

21 Pages Posted: 19 Sep 2013  

Prasanta K. Pattanaik

University of California, Riverside (UCR) - Department of Economics

Yongsheng Xu

Georgia State University - Andrew Young School of Policy Studies

Date Written: September 2013

Abstract

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

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

Prasanta K. Pattanaik

University of California, Riverside (UCR) - Department of Economics ( email )

900 University Avenue
4136 Sproul Hall
Riverside, CA 92521
United States
909-787-5037 x1592 (Phone)
909-787-5685 (Fax)

Yongsheng Xu (Contact Author)

Georgia State University - Andrew Young School of Policy Studies ( email )

Department of Economics
35 Broad Street, 6th Floor Department of Economics
Atlanta, GA 30303-3083
United States

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