RATIONALITY: THE MODEL OF CHOICE

RATIONALITY: THE MODEL OF CHOICE

Chapters 2 of Analyzing Politics  

K.A. Shepsle

A Summary 

Rationality

  • Individuals have preferences and they are self-interested in that they act in accordance with them. They operate in an uncertain external environment which affects the way they express their preferences. This means that often individuals do not have an exact sense of how an instrument or behavior relates to the outcome they desire. It is an individual’s beliefs that connect the instruments to the outcomes. Thus to be rational is to act in accordance with one’s preferences, and one’s beliefs. Individuals combine their beliefs about the external environment and their preferences for outcomes in that environment in a consistent manner.
  • The individual is the basic unit of analysis.
  • It is not important what motivates an individual’s preferences. All that matters is that the choices made are coherent in that they bear a logical relationship to his preferences.
  • A choice is rational if the object chosen is at least as good as any other available according to the chooser’s preferences.

 Preferences

  • Complete: alternatives are comparable. For any two possible alternatives the chooser either prefers one or is indifferent between them.
  • Transitive: if x<y<z then x<z
  • If these two conditions hold, the chooser has a preference ordering. Preferences that permit rational choices are in effect ordering principles.
  • There may be inconsistencies in preferences particularly when the stakes are low and uncertainty is high i.e. the result has little consequence for the chooser. Behaviour will under these conditions be more random than rational.

 Maximization

  • Preference ordering means an individual can take a set of objects and place them in an order that reflects personal tastes. Rationality is associated with being to so order, and also from being able to choose from as high up the order as is possible given the external environment. This last aspect is evidence of maximizing behaviour.

 Uncertainty

  • Individuals cannot often choose the outcome directly; they must choose an instrument to obtain the outcome. A belief is a probability statement about the instruments effectiveness in obtaining the outcome desired. If a chooser knows what will occur he is operating under conditions of certainty. If he is not totally sure an instrument will lead to a particular outcome he is operating under conditions of risk. If the relationship between instrument and outcome is so imprecise that it is impossible to assign probabilities then he operates under conditions of uncertainty.
  • In the last two cases, in order to see which course of action is best we assign utility numbers to outcomes which reflect the relative value of each. By assigning probabilities and calculating expected utilities we can choose the best lottery by choosing the lottery with the highest expected utility. Rationality demands that the individual choose the action that maximizes expected utility.
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