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A Few Questions Regarding The Irrational Behaviour And Economic Theory Model (1962) By Gary Becker

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THE JOURNAL OF
POLITICAL ECONOMY
Volume LXX
FEBRUARY 1962
Number I
IRRATIONAL BEHAVIOR AND ECONOMIC THEORY
GARY S. BECKER
Columbia University
I. INTRODUCTION
of a well-ordered function, such as a
A
LTHOUGH it has long been agreed
utility or profit function
that traditional economic theory
Strong and even violent differences
quot;assumesquot; rational behavior, at
developed, however, at a different level.
one time there was considerable disagree-
Critics claim that households and firms
ment over the meaning of the word quot;ra-
do not maximize, at least not consistent
tional.quot; To many, the word suggested ly, that preferences are not well ordered,
an outdated psychology, lightning-fast and that the theory is not useful in
calculation, hedonistic motivation, and explaining behavior. Some theorists have
other presumably unrealistic behavior, replied that economic theory is valid
As economic theory became more clear-
only as a broad tendency, not in each
ly and precisely formulated, controversy
specific instance; some noted that the
over the meaning of the assumptions
quot;proof of the pudding is in the eating,quot;
diminished greatly, and now everyone
and argued that this theory gives use-
more or less agrees that rational behavior
ful predictions even though decisions do
simply implies consistent maximization
not quot;seemquot; to be rational; still others
claimed that only rational behavior has
1 My greatest debt is to A. A. Alchian for the
stimulation provided by his article of more than
much chance of surviving a very harsh
a decade ago (quot;Uncertainty, Evolution and Eco-
competitive world.
nomic Theory,quot; Journal of Political Economy, LVIII
The purpose of this paper is not to
(June 1950]), and for comments on various drafts,
beginning in the summer of 1957. I am also indebted
contribute still another defense of eco-
to M. Friedman for insightful oral and written
nomic rationality. Rather it is to show
statements (see quot;The Methodology of Positive Eco-
how the important theorems of modern
nomics,quot; in Essays in Positive Economics (Chicago:
University of Chicago Press, 1931]) on economic
economics result from a general principle
rationality, to seminar groups at Columbia, the
which not only includes rational behavior
National Bureau of Economic Research, North Car-
olina State College, UCLA, and Stanford, and to
and survivor arguments as special cases,
Z. Griliches, H. G. Johnson, H. G. Lewis, J. Mincer,
but also much irrational behavior. No
P. J. Nelson, and G. J. Stigler. I alone am responsi-
matter what the intent, some readers
ble, however, for any remaining errors.
might believe that the effect of this dem-
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