chapter  3
21 Pages

RATIONALITY AND CONDITIONAL EXPECTATIONS

Economists have used the terms 'rational' and 'rationality' for so many different concepts that it is quite tempting to attach subscripts to separate them! Besides the familiar rational choice, for example, we readily find rational degrees of belief (Keynes), rational conduct (Knight), rational processes (Hayek), and rational expectations (Muth, Lucas); even rational termination (Brams) and rational distributed lags (Jorgenson). Similarly, as conveniently summarized by March (1978), there are bounded rationality (Simon, Lindblom, Radner), contextual rationality (March), game rationality (Brams, Harsanyi and Selton), process rationality (Edelman, Cohen and March), adaptive or experiential rationality (Day and Groves), selected rationality (Nelson and Winter), posterior rationality (Hirschman), and quasirationality - enough concepts to make one dizzy.