The pulse-like nature of decisions in rational choice theory

Abstract

Is the act of making a decision a process or pulse? Critiques of rational choice theory and models often treat cognitive processes of preference ordering as part of the act of decision that should be incorporated into the models. The failure to account for human psychology, they argue, responds for RCT’s lack of predictability. However, this argument and the models of human mind, such as prospect theory, see decision as a process that begins at the cognitive considerations of preference ordering and extends up to the act of decision. In this paper, I argue that decision is analogous to a pulse rather than a process. I draw this analogy with the Dirac delta function, which in signal theory represents an unitary pulse. In the exact moment of making a decision, all preferences and contextual evaluations must have been already structured in the agent’s mind, otherwise she would not be capable of making the decision. Acknowledging the pulse-like nature of rational choice models allows modellers to eschew the incorporation of complex cognitive processes into their analyses, which has both theoretical and empirical implications to RCT’s representation of real-world phenomena.