F.A. Hayek and the Rationality of Individual Choice

21 Pages Posted: 22 Jun 2015 Last revised: 30 Jun 2019

Date Written: June 11, 2015

Abstract

An under-appreciated aspect of F.A. Hayek’s mature views about rationality is the inter-relation of the “pure logic of choice” and rule-following behavior. Sometimes it is asserted that Hayek abandoned his earlier understanding of individual rationality and replaced it with a completely rule-oriented conception of decisionmaking. In fact, however, the analysis in Hayek’s Sensory Order gives us the framework in which the relative roles of explicit choice-logic and rule-following can be discerned.

Furthermore, this framework also shows that his fundamental conception of individual rationality is pragmatic, contextual, modifiable, and ecological. While standard neoclassical economists were axiomatizing the explicit logic of choice, Hayek was decades ahead of these economists in understanding the nature of decisionmaking outside of completely artificial worlds in which there are no cognitive limits and in which the structure of the environment is simple. This article attempts to lay the foundation for an integrated understanding of Hayek’s pragmatic rule-following rationality and the “ecological rationality” of Gerd Gigerenzer and other researchers.

Keywords: Hayek, Sensory Order, Pure Logic of Choice

JEL Classification: B21, B31, B41, D00

Suggested Citation

Rizzo, Mario J., F.A. Hayek and the Rationality of Individual Choice (June 11, 2015). Available at SSRN: https://ssrn.com/abstract=2621269 or http://dx.doi.org/10.2139/ssrn.2621269

Mario J. Rizzo (Contact Author)

New York University ( email )

Department of Economics
19 W, 4th Street
New York, NY 10012
United States
212-998-8932 (Phone)
212-995-4186 (Fax)

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