A rational agent or rational being is a person or entity that always aims to perform

optimal Mathematical optimization (alternatively spelled ''optimisation'') or mathematical programming is the selection of a best element, with regard to some criterion, from some set of available alternatives. It is generally divided into two subfi ...

actions based on given premises and information. A rational agent can be anything that makes decisions, typically a

person A person ( : people) is a being that has certain capacities or attributes such as reason, morality, consciousness or self-consciousness, and being a part of a culturally established form of social relations such as kinship, ownership of prope ...

firm A company, abbreviated as co., is a legal entity representing an association of people, whether natural, legal or a mixture of both, with a specific objective. Company members share a common purpose and unite to achieve specific, declared ...

machine A machine is a physical system using power to apply forces and control movement to perform an action. The term is commonly applied to artificial devices, such as those employing engines or motors, but also to natural biological macromolecul ...

, or

software Software is a set of computer programs and associated documentation and data. This is in contrast to hardware, from which the system is built and which actually performs the work. At the lowest programming level, executable code consist ...

. The concept of rational agents can be found in various disciplines such as

artificial intelligence Artificial intelligence (AI) is intelligence—perceiving, synthesizing, and inferring information—demonstrated by machines, as opposed to intelligence displayed by animals and humans. Example tasks in which this is done include speech ...

, cognitive science,

decision theory Decision theory (or the theory of choice; not to be confused with choice theory) is a branch of applied probability theory concerned with the theory of making decisions based on assigning probabilities to various factors and assigning numerical ...

economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics anal ...

ethics Ethics or moral philosophy is a branch of philosophy that "involves systematizing, defending, and recommending concepts of right and wrong behavior".''Internet Encyclopedia of Philosophy'' The field of ethics, along with aesthetics, concer ...

game theory Game theory is the study of mathematical models of strategic interactions among rational agents. Myerson, Roger B. (1991). ''Game Theory: Analysis of Conflict,'' Harvard University Press, p.&nbs1 Chapter-preview links, ppvii–xi It has appli ...

, and the study of

practical reason In philosophy, practical reason is the use of reason to decide how to act. It contrasts with theoretical reason, often called speculative reason, the use of reason to decide what to follow. For example, agents use practical reason to decide whethe ...

Economics

In reference to economics, rational agent refers to hypothetical consumers and how they make decisions in a

free market In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any ot ...

. This concept is one of the assumptions made in

neoclassical economic theory Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are observed as driven by the supply and demand model. According to this line of thought, the value of a good ...

. The concept of economic

rationality Rationality is the quality of being guided by or based on reasons. In this regard, a person acts rationally if they have a good reason for what they do or a belief is rational if it is based on strong evidence. This quality can apply to an ab ...

arises from a tradition of marginal analysis used in neoclassical economics. The idea of a rational agent is important to the philosophy of

utilitarianism In ethical philosophy, utilitarianism is a family of normative ethical theories that prescribe actions that maximize happiness and well-being for all affected individuals. Although different varieties of utilitarianism admit different chara ...

, as detailed by philosopher

Jeremy Bentham Jeremy Bentham (; 15 February 1748 ld Style and New Style dates, O.S. 4 February 1747– 6 June 1832) was an English philosopher, jurist, and social reformer regarded as the founder of modern utilitarianism. Bentham defined as the "fundam ...

's theory of the

felicific calculus The felicific calculus is an algorithm formulated by utilitarian philosopher Jeremy Bentham (1747–1832) for calculating the degree or amount of pleasure that a specific action is likely to induce. Bentham, an ethical hedonist, believed the mo ...

, also known as the hedonistic calculus. The action a rational agent takes depends on: * the preferences of the agent * the agent's information of its environment, which may come from past experiences * the actions, duties and obligations available to the agent * the estimated or actual benefits and the chances of success of the actions. In

and classical

, it is often assumed that the

actor An actor or actress is a person who portrays a character in a performance. The actor performs "in the flesh" in the traditional medium of the theatre or in modern media such as film, radio, and television. The analogous Greek term is (), lit ...

s, people, and firms are rational. However, the extent to which people and firms behave rationally is subject to debate. Economists often assume the models of

rational choice theory Rational choice theory refers to a set of guidelines that help understand economic and social behaviour. The theory originated in the eighteenth century and can be traced back to political economist and philosopher, Adam Smith. The theory postula ...

and

bounded rationality Bounded rationality is the idea that rationality is limited when individuals make decisions, and under these limitations, rational individuals will select a decision that is satisfactory rather than optimal. Limitations include the difficulty o ...

to formalize and predict the behavior of individuals and firms. Rational agents sometimes behave in manners that are counter-intuitive to many people, as in the

traveler's dilemma In game theory, the traveler's dilemma (sometimes abbreviated TD) is a non-zero-sum game in which each player proposes a payoff. The lower of the two proposals wins; the lowball player receives the lowball payoff plus a small bonus, and the highball ...

Criticisms

Many economic theories reject

and rational agency, especially those that might be considered

heterodox In religion, heterodoxy (from Ancient Greek: , "other, another, different" + , "popular belief") means "any opinions or doctrines at variance with an official or orthodox position". Under this definition, heterodoxy is similar to unorthodoxy, w ...

. For example,

Thorstein Veblen Thorstein Bunde Veblen (July 30, 1857 – August 3, 1929) was a Norwegian-American economist and sociologist who, during his lifetime, emerged as a well-known critic of capitalism. In his best-known book, ''The Theory of the Leisure Class'' ...

, known as the father of

institutional economics Institutional economics focuses on understanding the role of the evolutionary process and the role of institutions in shaping economic behavior. Its original focus lay in Thorstein Veblen's instinct-oriented dichotomy between technology on the ...

, rejects the notion of hedonistic calculus and pure rationality saying: "The hedonistic conception of man is that of a lightning calculator of pleasures and pains who oscillates like a homogeneous globule of desire of happiness under the impulse of stimuli that shift him about the area, but leave him intact." Veblen instead perceives human economic decisions as the result of multiple complex cumulative factors: "It is the characteristic of man to do something, not simply to suffer pleasures and pains through the impact of suitable forces. He is ... a coherent structure of propensities and habits which seeks realization and expression in an unfolding activity. ... They are the products of his hereditary traits and his past experience, cumulatively wrought out under a given body of traditions conventionalities, and material circumstances; and they afford the point of departure for the next step in the process. The economic life history of the individual is a cumulative process of adaptation of means to ends that cumulatively change as the process goes on, both the agent and his environment being at any point the outcome of the last process."

Evolutionary economics Evolutionary economics is part of mainstream economics as well as a heterodox school of economic thought that is inspired by evolutionary biology. Much like mainstream economics, it stresses complex interdependencies, competition, growth, stru ...

also provides criticisms of the Rational Agent, citing the "parental bent" (the idea that biological impulses can and do frequently override rational decision making based on utility). Arguments against rational agency have also cited the enormous influence of

marketing Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emph ...

as proof that humans can be persuaded to make economic decisions that are "non-rational" in nature.

Alternate theories

Neuroeconomics Neuroeconomics is an interdisciplinary field that seeks to explain human decision-making, the ability to process multiple alternatives and to follow through on a plan of action. It studies how economic behavior can shape our understanding of t ...

is a concept that uses

neuroscience Neuroscience is the science, scientific study of the nervous system (the brain, spinal cord, and peripheral nervous system), its functions and disorders. It is a Multidisciplinary approach, multidisciplinary science that combines physiology, an ...

, social

psychology Psychology is the science, scientific study of mind and behavior. Psychology includes the study of consciousness, conscious and Unconscious mind, unconscious phenomena, including feelings and thoughts. It is an academic discipline of immens ...

and other fields of science to better understand how people make decisions. Unlike rational agent theory,

neuroeconomics Neuroeconomics is an interdisciplinary field that seeks to explain human decision-making, the ability to process multiple alternatives and to follow through on a plan of action. It studies how economic behavior can shape our understanding of t ...

does not attempt to predict large-scale human behavior but rather how individuals make decisions in case-by-case scenarios.

Artificial intelligence

Artificial intelligence Artificial intelligence (AI) is intelligence—perceiving, synthesizing, and inferring information—demonstrated by machines, as opposed to intelligence displayed by animals and humans. Example tasks in which this is done include speech ...

has borrowed the term "rational agents" from economics to describe autonomous programs that are capable of goal directed behavior. Today there is a considerable overlap between AI research, game theory and decision theory. Rational agents in AI are closely related to ''

intelligent agent In artificial intelligence, an intelligent agent (IA) is anything which perceives its environment, takes actions autonomously in order to achieve goals, and may improve its performance with learning or may use knowledge. They may be simple or ...

s'', autonomous software programs that display intelligence.

References

Economics and game theory

* *

Artificial intelligence

* {{Russell Norvig 2003 Artificial intelligence Concepts in ethics Concepts in the philosophy of mind Concepts in the philosophy of science Ethics Game theory History of ethics History of mathematics History of philosophy History of science Intellectual history Neoclassical economics Philosophical concepts Philosophical theories Philosophy of mathematics Philosophy of mind Philosophy of science Reasoning

Economics

Criticisms

Alternate theories

Artificial intelligence

See also

Economics

Software

References

Economics and game theory

Artificial intelligence