TITLE:
Rational Choice Theory: Toward a Psychological, Social, and Material Contextualization of Human Choice Behavior
AUTHORS:
Tom Burns, Ewa Roszkowska
KEYWORDS:
Rational Choice Theory, Cognitive Revisions, Psychological, Social, and Material Embeddedness, Moral Agency, Theory Fragmentation
JOURNAL NAME:
Theoretical Economics Letters,
Vol.6 No.2,
April
14,
2016
ABSTRACT: The main purpose of
this paper is to provide a brief overview of the rational choice approach, followed
by an identification of several of the major criticisms of RCT and its
conceptual and empirical limitations. It goes on to present a few key
initiatives to develop alternative, more realistic approaches which transcend
some of the limitations of Rational Choice Theory (RCT). Finally, the article
presents a few concluding reflections and a table comparing similarities and
differences between the mainstream RCT and some of the initial components of an
emerging choice theory. Our method has been to conduct a brief selective review
of rational choice theoretical formulations and applications as well as a
review of diverse critical literature in the social sciences where rational
choice has been systematically criticized. We have focused on a number of
leading contributors (among others, several Nobel Prize Recipients in
economics, who have addressed rational choice issues). So this article makes no
claim for completeness. The review maps a few key concepts and assumptions
underpinning the conceptual model and empirical applications of RCT. It reviews
also a range of critical arguments and evidence of limitations. It identifies
selected emerging concepts and theoretical revisions and adaptations to choice
theory and what they entail. The results obtained, based on our literature
reviews and analyses, are the identification of several major limitations of
RCT as well as selected modifications and adaptations of choice theory which
overcome or promise to overcome some of the RCT limitations. Thus, the article
with Table 1 in hand provides a point of departure for follow-up systematic
reviews and more precise questions for future theory development. The
criticisms and adaptations of RCT have contributed to greater realism,
empirical relevance, and increased moral considerations. The developments
entail, among other things: the now well-known cognitive limitations (“bounded
rationality”) and, for instance, the role of satisficing rather than maximizing
in decision-making to deal with cognitive complexity and the uncertainties of
multiple values; choice situations are re-contextualized with psychology,
sociology, economic, and material conditions and factors which are taken into
account explicitly and insightfully in empirical and theoretical work. Part of
the contextualization concerns the place of multiple values, role and norm
contradictions, and moral dilemmas in much choice behavior. In conclusion, the
article suggests that the adaptations and modifications made in choice theory
have led to substantial fragmentation of choice theory and as of yet no integrated
approach has appeared to simply displace RCT.