Abstract

AbstractThe paper raises the question of irreducibility of collective rationality to individual rationality. The irreducibility of collective rationality to individual rationality is explained by the phenomenon of complexity and complex character of human nature. Taking the complexity theory approach to the analysis of institutions, it discusses the question of dependency of individual rationality on collective rationality. It is asserted that collective rationality emerges not merely from the human capacity for rational reasoning but from a variety of other human capabilities which influence the formation and functioning of socioeconomic institutions. Institutions, in turn, are understood here to be a specific embodiment of collective rationality.

Highlights

  • An example of the influence of collective rationality on individual rationality can be the role that is played by institutions and norms

  • The important question concerns the issue about the neoclassical type of individual rationality in its relation with socioeconomic institutions

  • The church-supported faith in the afterlife and punishments from God, prolonging the “the shadow of the future”, could facilitate the evolution of social cooperation; and this is one of the most obvious examples of how emotions are built into institutions, forming collective rationality

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Summary

Introduction

The concept of rationality is one of the fundamental and most controversial elements of economic theory. Theories of rationality can have far-reaching effects on economic reality. Economic rationality is associated with optimisation and efficiency. The concept of rationality is primarily related to the neoclassical doctrine which focuses on the behaviour of individuals (consumers, firms) and assumes that their rational strategy consists in the maximization of their expected subjective utility. This is exactly a core of the mainstream theory of rational choice, which is associated with positivism, instrumentalism and methodological individualism.

Vozna Independent researcher, Zhytomyr, Ukraine
The Problem of Irreducibility of Collective Rationality to Individual Rationality
The Bounded Rationality Versus the Variety of Human Nature
Individuals Are Not Rational in the Neoclassical Sense
The Behaviour That Seems Irrational Can Lead to Rational Results
Information, Complexity and the Principle of Emergence
Complexity and Institutions
Institutions and Human Emotions
The Institution of Innovative Entrepreneurship
The Prisoner’s Dilemma, the “Shadow of the Future” and Institutionalization of Emotions
Concluding Remarks
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