Rationality and Context-Dependent Preferences

Abstract

The standard theory of rational choice in economics considers an agent’s choices to be rational if and only if the agent makes her choices in different choice situations on the basis of a fixed preference ordering defined over the set of all possible options. This implies that a rational agent’s preferences cannot be context-dependent. This paper outlines a simple framework for defining context-dependence of preferences and for discussing relationships between context-dependent preferences and the notion of rationality.