ABSTRACT
The chapter discusses different types of rationality: normative, following logical rules; instrumental, focussed on achieving our goals; and epistemic, evidence-based beliefs about the world. There is a brief look at the forms that logical thinking takes –induction, deduction, and abduction – and the extent to which we are not always that good at it. Our deductions are also usually biased based on the semantics of an argument rather than its logical structure. Recently, this ‘deductive paradigm’ has been giving way to the ‘new reasoning paradigm’ that takes account of beliefs and ‘subjective probability’ which takes a Bayesian view of how beliefs affect our thinking and the role of information in influencing them. Ideally, to be ‘fully’ instrumentally rational, we should endeavour to maximize our expected utility by using all the information available to us. This is the ‘homo economicus’ model proposed by classical economists. There has been a shift from that paradigm to behavioural economics and the heuristics and biases approach to thinking. For example, we tend to rely on heuristics such as satisficing where we choose the first option that meets whatever criteria we have established due to our bounded rationality.
