Rationality of Belief and Action in the Economy

General Director:
Kenneth J. Arrow, Stanford University

Co-director:
Motty Perry, The Hebrew University of Jerusalem

 

Rationality of action has been a standard assumption in economic theory from the time of Adam Smith, and in recent times the concept has been extended to rational action under uncertainty. With uncertainty, the problem of rational choice assumes a new dimension, since rationality is relative to beliefs, and the beliefs themselves may be formed rationally or irrationally. The usefulness and relevance of the rationality hypotheses will be explored in these lectures. The topics covered will include the following:
(1) the structure of rationality hypotheses and their use in the economics;
(2) the formation of rational belief in interactive (game-theoretic or market) situations;
(3) the implications of selection and learning for rationality of behaviour
(4) the formation of rational expectations in securities markets and the empirical evidence; and
(5) tests of rationality from psychological experiments and other evidence in economic behaviour.

 

Speakers:

Kenneth J. Arrow, Stanford University
Robert J. Aumann, The Hebrew University of Jerusalem
Ken Binmore, University College London
Dov Samet, Tel Aviv University
Amartya K. Sen, Harvard University
Andrei Shleifer, Harvard University
Richard Thaler, Cornell University