Can Rational Choice Theory explain Human Behavior? Why or why not?

Share:
Source https://unsplash.com/photos/J1FBR-U0cGg

1. Introduction

The main assumption underlying Rational Choice Theory (RCT) is that people act rationally. The question at hand is: Why, however, do people behave less than rational in so many cases? What causes them to behave that way? And can RCT account for this behavior?

In the following, I will discuss why the internalist interpretation of RCT fails to account for irrational human behavior and how the externalist interpretation can better help with understanding actual human behavior with accounting for social structures. We will hence identify the reason for irrational behavior and see how RCT can account for it. In this context, we will also see what the theories nature demands in order to be able to capture actual human behavior.

2. The Concept of Rationality

RCT is a psychological theory that “explains a person’s actions in terms of her mental states”, while a rational choice is defined as one that is the best amongst alternatives, taking into account preferences and beliefs (Satz, Ferejohn 1994: 71).

Within the internalist interpretation, RCT is supposed to identify what is going on inside humans when they reason. Preferences and beliefs are said to be causally related to, or in other words, reason for, a choice that is made by an agent. In a way, this suggests that the internalist interpretation does not explain, but causate human behavior. The theory on the internalist interpretation prescribes what an individual ought to do in order to act rationally and is hence seen as an individualistic theory (Satz, Ferejohn 1994: 71).

Next to the high costs or even impossibility of computing and gathering information for maximisation calculations (Simon 1955: 104), which often leads to “satisficing” of choices, a predominant question that arises is whether preferences and beliefs are enough to explain choices.

Accordingly, Sen (1977: 324) considers it an open question whether the “complex psychological issues underlying choice” can be captured “within the formal limits of consistent choice”. In her argument, consistent choice arises only if an individuals’ choice is always caused by egoistic preferences. However, Sen argues that, especially in group environments, committed behavior is often involved. Committed behavior is not driven by egoism and thus leads to inconsistent choices, namely ones that yield a “lower level of personal welfare” (Sen 1977: 327).

The interpretation of rationality in RCT is instrumental (Herfeld 2013: 119), putting into foreground the relationship of means and ends. An action is “instrumentally rational if the agent uses the most appropriate means to achieve the given ends” (Hands 2011: 4). Morality is reduced to rationality (Spohn 1993: 159), corresponding to the instrumental interpretation of rationality. It is difficult to account for committed behavior with the theories’ reliance on an instrumental understanding, as the definition of rationality within the internalist interpretation of RCT neglects the reference to non-egoistic, committed behavior. Behavior that arises outside the narrow definition of rationality will hence be declared as irrational and can in turn not be explained by the theory, since it is outside the models’ scope. It follows that the internal interpretation of RCT fails to account for actual behavior - that can be empirically observed as including less-than-rational behavior - outside of its narrow rationality definition.

Having answered the question why humans often act irrationally, the question whether RCT with a broader definition of rationality may be able to account for this behavior, remains. Which leads us to the next chapter, where we see an opposition and possible solution to the limited internalist interpretation of RCT.

3. Consideration of Group Structures

The externalist interpretation of RCT is a response to what we examined in the last section; in that it does not suppose internal psychological actions to primarily explain human behavior. It rather considers external influence. By definition in lexicology (Lipka 1992: 16), behavior [B] equates frequent actions [a] plus the account for social norms [Sn].

B = (a1 + a2 + ... + an) + Sn

It becomes clear that social interaction is the difference of human action and human behavior. Hence, social interaction is crucial in understanding human behavior, as opposed to only actions and also in order to account for less-than-rational behavior.

We have examined the limits of instrumental rationality in explaining human behavior with regard to external structures. “A broader concept of rationality” is required (Adanali 2017: 138) in order to account for collective behavior. We may see in the following how individuals are interconnected and how – other than suspected by the internal interpretation - collective choices cannot be reduced to individuals.

Individual behavior satisfies external coherence, leading to an equilibrium of choices. Therefore, in the externalist interpretation of RCT, the main driver behind individual choices is not claimed to be arising from internal psychology, but rather from external structures (Satz, Ferejohn 1994: 77).

Scientific reductionists state that social phenomena may be reduced from the general to individuals. For individuals are easier to explain than social constructs, science ought to reduce from a social construct to the individual whenever possible (Gillett 2016: 163). However, “events in the external world causally affect the mental events of a subject” (Burge 1986: 15), meaning that social effects cause “two persons to have identical brain states and think different things” (Satz, Ferejohn 1994: 83). Hence, the principle of supervenience cannot be made use of in concluding from social constructs to an individual. Otherwise, the implications will be heavily distorted, in that irrational behavior is not accounted for.

Accordingly, Satz and Ferejohn (1994: 84) ask: What leads to the belief that individuals’ behavior will influence the bigger picture – social structures? It might in many situations be more plausible that it is the other way round, namely social norms causing a certain individual behavior.

4. Can the Theory Account for Human Behavior?

A question regarding RCT that has often been raised in the past is whether a theory can be both descriptive and normative. Take as an analogous example the statement “A, B and C imply D” versus “if you like A, B and C, you should also like D”. The latter states psychological states and beliefs, while the former does not. (Harman 2002: 3). According to Spohn (1993: 186ff), it can – and should. While normativity is explaining the causality within rationality, the theories empirical nature is what keeps it within adequate limits. Therefore, the theory must be descriptive and normative at once to be both realistic and coherent.

To bring this into context of our previous discussion, I argue that in order to achieve a dual theory of both normative and empirical nature, and hence sufficiently account for human behavior, one ought to stick to the externalist interpretation of RCT.

With the internalist interpretation, one will only arrive at normativity for it looks at what an individual ought to do in order to act rational. This, however, happens without accounting for actual human behavior, which according to empirical observations, includes irrational behavior. To include this behavior, is necessary to claim the theory descriptive. In the external interpretation, we have identified on top of the normative character, that it also accounts for actual, empirically observable behavior, namely irrational behavior. The account of behavior in group contexts can be included in the personal utility function and hence function as normative demand to act in a certain way. However, it has to be noted that the theory still works best in very constrained environments, which is already suggested by its normative nature.

Consequentially, only in the external interpretation of RCT, the dual nature of the theory is given. Since the theory needs to be both normative and descriptive, the internalist interpretation should be rejected as a theory that is able to explain actual human behavior.

5. Conclusion

We have examined the reason why humans act less than rational, namely due to group structures. Thereafter, we have seen how the externalist interpretation of RCT better accounts for such behavior with its broader concept of rationality.
We have furthermore found that RCT can account for human behavior with the external interpretation since it accounts not only for the theory’s normative, but also descriptive nature and hence less-than rational behavior.

Bibliography

Adanali, Y. K. (2017). Rational choice theory: its merits and limits in explaining and predicting cultural behavior. Erasmus journal for philosophy and economics, 10(1), 137–141.

Burge, T. (1986). Individualism and Psychology. The philosophical review, 95(1), 3.

Gillett, C. (2016). Understanding Scientific Reductionism: Fundamentalist Views of Ontology, Laws, Sciences, and Methodology. In Reduction and Emergence in Science and Philosophy. Cambridge: Cambridge University Press: 140–170

Hands, D. W. (2011). Normative rational choice theory: Past, present, and future. SSRN Electronic Journal.

Harman, G. (2002). Internal critique: A logic is not a theory of reasoning and a theory of reasoning is not a logic. In Handbook of the Logic of Argument and Inference — The Turn Towards the Practical (S. 171–186). Elsevier.

Herfeld, C. (2013). The many faces of rational choice theory. Erasmus journal for philosophy and economics, 6(2), 117.

Lipka, L. (1992). An outline of English lexicology: Lexical structure, word semantics, and word-formation. 2 ed. Max Niemeyer Verlag Tübingen

Satz, D., Ferejohn, J., & Journal of Philosophy Inc. (1994). Rational Choice and Social Theory. The journal of philosophy, 91(2), 71–87.

Simon, H. A. (1955). A behavioral model of rational choice. The Quarterly Journal of Economics, 69(1), 99.

Sen, Amartya K. (1977). Rational fools: A critique of the behavioral foundations of economic theory. Philosophy and Public Affairs 6 (4):317–344.

Spohn, W. (1993). Wie kann die Theorie der Rationalität normativ und empirisch zugleich sein?. Eckensberger, Lutz H. (ed.), Ulrich Gähde (ed.) Ethische Norm und empirische Hypothese. Frankfurt a.M:Suhrkamp: 151–196.