Rationality and institutions: an inquiry into the normative implications of rational choice theory

Abstract

I aim to analyze in this dissertation what a desirable basic institutional structure looks like from the perspective of rationality. While the main topic is thus normative in nature, I start by clarifying in the first part what the notion of rationality exactly entails. I do so by focusing explicitly on the economic conception of rationality, according to which a rational individual is motivated to serve his self-interest on the basis of cost-benefit calculations. Such a Homo Economicus is characterized by his intentional and instrumental actions, his perfectly informed beliefs and his exogenously given and egoistic preferences. In my view, however, this model is inadequate if one aims to understand what it means to be rational. The requirements that actions should be instrumental, beliefs should be based on perfect information and preferences should be exogenously given and egoistic in nature turn out to be overly demanding in this respect.That is why I propose to drop these assumptions in what I label the minimal conception of rationality. Since the latter turns out to be very formal indeed, I propose two further alternatives, which focus not so much on the choice of means to achieve certain goals, as they focus on the choice of these goals themselves. According to the first, broad conception, actions are rational if they are based on good reasons, which are further qualified as well-informed beliefs and autonomous preferences. According to the second, expressive conception, actions, beliefs and preferences are rational if they express the things the individual at hand cares about. The latter requires that individuals can reflect upon and identify with their reasons, which implies a capacity to reflect upon and distance themselves from their own bundle of preferences.