Informing rational choice theory through case studies of loss-aversion
Date
2011
Authors
Rakowski, Peter, author
Sarenac, Darko, advisor
Losonsky, Michael, committee member
Kroll, Stephan, committee member
Journal Title
Journal ISSN
Volume Title
Abstract
The problem this thesis addresses is that there are two disparate general notions of a 'rational decision' and neither notion is satisfactory as the basis for a rational choice theory that can improve our lives by improving our decision-making. One is too strict, labeling too many decisions irrational, while the other is too permissive, allowing decisions to be called rational when they should not be. I attempt to outline a better version of rationality, which I call global rationality, by examining the problems with the common notions in the context of a discussion of the well-documented phenomenon of loss-aversion in decision-making. While looking at case studies of loss-aversion, I argue for two main distinguishing features of my global rationality: it should respect an internalist view so that the rigid requirements of the standard rational choice theory will often not apply (while maintaining limits regarding which consistency requirements can be disregarded), and it should respect emotional utilities--the negative or positive emotions that accompany a decision should factor into the utility calculus (with important qualifications). I conclude with suggestions as to how the skeletal global rationality I've outlined can be filled-out in the future, in the process also offering some insights into the dynamic nature of rationality itself.