Daniel Kahneman - Interview Transcript | Science, Technology, and Current Futurism | Scoop.it
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I never think of myself as having demonstrated irrationality.  There is a definition of rationality within the contest of economic theory or decision theory more broadly, which is a completely unrealistic conception of a human agent with a complete preference order about all states of the world, with a Bayesian set of beliefs about all possible states and this defines rationality in the context of economic theory. Now as a descriptive hypothesis this is a totally implausible hypothesis and, you know, it is fairly easy to show that that hypothesis isn’t true and we’ve been doing that, my late colleague Amos Tversky and I, and many others. It’s also not particularly interesting to show that it isn’t true because it’s so easy to do. We have been able to show some of the ways in which people depart from this ideal of rationality but this is not irrationality. People are reasonable, they’re prudent agents. It’s just that the definition of rationality that is used in economic theory is, I think, a very implausible definition and it fails descriptively and we have been able to document some of these failures and explain them.