ABSTRACT
The journey through the basic models of political economy reveals that the bulk of these models is built on the assumptions that individuals have connected and transitive preferences over alternatives and that all the action in political economy is about making choices. Taken together, these assumptions imply that essential to political economy is maximizing behavior. As we saw in chapter 4, homo œconomicus has been under attack for quite some time, but survived in remarkably good shape. Much of the success of this model is due to the lack of credible alternatives. If one abandons the assumption of rationality in the thin sense, then the floodgates are open for nearly arbitrary explanatory accounts of human behavior. If the systematic violations of rationality axioms are taken as the point of departure – as e.g. in prospect theory – the simple elegance of the axiomatic choice theory is lost and we are left with a bewildering variety of theoretical systems which account for some particular types of violations of the standard theory.
