Best-response sets (Pearce [29, 1984]) characterize the epistemic condition of “rationality and common belief of rationality.” When rationality incorporates a weak-dominance (admissibility) requirement, the self-admissible set (SAS) concept (Brandenburger-Friedenberg-Keisler [18, 2008]) characterizes “rationality and common assumption of rationality.” We analyze the behavior of SAS’s in some ga...

An important research tradition in the cognitive psychology of reasoning-called the heuristics and biases approach-has firmly established that people's responses often deviate from the performance considered normative on many reasoning tasks. For example, people assess probabilities incorrectly, they display confirmation bias, they test hypotheses inefficiently, they violate the axioms of utili...

This paper describes and motivates a new decision theory known as functional decision theory (FDT), as distinct from causal decision theory and evidential decision theory. Functional decision theorists hold that the normative principle for action is to treat one's decision as the output of a fixed mathematical function that answers the question,"Which output of this very function would yield th...

D and normative modeling of decision making under risk and uncertainty have grown apart over the past decade. Psychological models attempt to accommodate the numerous violations of rationality axioms, including independence and transitivity. Meanwhile, normatively oriented decision analysts continue to insist on the applied usefulness of the subjective expected utility (SEU) model. As this gap ...

Rationality is a conspicuous yet neglected phenomenon. It has received much attention from philosophers and some social scientists, who have treated rationality as the hallmark of science, of economic action, or of modernity in general. Yet with all this attention, rationality has been conspicuously taken for granted, and its taken-for-grantedness has licensed a neglect of the practical activit...

A fundamental rationality assumption of many models of choices under risk and uncertainty is that the sequencing of events should not matter to a decision maker so long as the consequences arise under the same conditions, ignoring the order of events. Subjective expected utility (SEU) implies this property without exception; however, SEU is known not to be descriptive. The boundary between SEU ...

Rationality is a fundamental concept in economics. Most researchers will accept that human beings are not fully rational. Herbert Simon suggested that we are “bounded rational”. However, it is very difficult to quantify “bounded rationality”, and therefore it is difficult to pinpoint its impact to all those economic theories that depend on the assumption of full rationality. Ariel Rubinstein pr...

PHD THESIS SUMMARY: Rationality and institutions: an inquiry into the normative implications of rational choice theory. In my dissertation, I aim to analyze what a desirable basic institutional structure looks like from the perspective of rational choice theory. While the main topic is thus normative in nature, I start by clarifying in the first part what the notion of rationality exactly entai...