Preference, Choice, and Rationality

Abstract

INTRODUCTION The theory of preference and rational choice of individuals constitutes the foundation of much of positive economic theory. It is also intimately linked to normative economics, especially the part of normative economics that studies welfare properties of the competitive market mechanism. It is not, therefore, surprising that the theory of individual preference and rational choice has engaged some of the leading economic theorists of our time, such as Kenneth J. Arrow (1958, 1959, 1971), J. R. Hicks (1939, 1956), P. Samuelson (1938, 1947), and A. K. Sen (1969, 1971, 1973, 1974, 1977a, 1977b, 1981, 1986a, 1986b, 1989, 1991, 1993, 1994, 1995). The role of Sen in this foundational area of economic theory has been somewhat different from that of many other prominent theorists. Though, in some of his earlier works (see Sen 1969, 1971, 1977a), Sen has made important contributions to the traditional economic theory of rational choice and preference, several aspects of this theory have come under searching criticism by him. He has repeatedly asked probing questions about the intuitive significance and realism of various elements in the mainstream economic theory of rational choice and drawn attention to many limitations of the theory. The purpose of this chapter is to review Sen's contributions to the theory of rational choice by individuals, especially his contributions as a critic of the conventional economic theory of rational choice.