Study/Discussion Questions on "Rationality"

1. Define "choice" and "preference" as used in rational choice theory.

2. What are the central claims of "folk psychology"? Are they true?

3. What does it mean to say that preferences are complete and transitive? How can one defend the claim that incomplete or intransitive preferences are irrational?

4. What is a "weak ordering"?

5. What is "utility"? What is an "ordinal utility function"?

6. What does it mean to say that rational agents are utility maximizers? What does this claim imply about the aims and goals of individuals? What connection does this claim have to questions about whether individuals are self-interested or altruistic?

7. Utility theory is a normative theory. What does this mean? What role can a normative theory have in a theory which attempts to explain and predict people's choices?

8. What does the cardinal representation theorem say? What does it imply about the measurability of utility? What is "utility" in expected utility theory? What is the difference between the expected value of a monetary gamble and the expected utility of a monetary gamble?

9. Explain why a preference for A over B and D over C in Allais' problem violates the independence condition. Do you think it is irrational to prefer A or B and at the same time to prefer D to C? What arguments would you make?

10. Is "future-Tuesday indifference" irrational?