One of the reasons for Schelling's Nobel Prize award is his propensity to consider aspects neglected by the existing theory and to develop new concepts and analytical tools, thereby extending the scope of economic analysis. One of his main contributions is a wider interpretation of the concept of rationality and rational behavior. Even if Schelling has always claimed that his work belongs within the bounda ries of the perfect ra tiona lity a pproach, close inspection of it reveals a more complex idea of human rationa lity. Starting from his Strategy of Conflict (1960) and continuing with his later studies on substance abuse and habitual behavior, until his last Strategy of Commitment (2006), it seems possible to outline an evolving concept of rationality. Individual rationality is described as a collection of attributes, and individuals are considered to be involved in two different levels of strategic interaction: the first taking place within individuals, among the different selves that people seem to embody, and the second referring to social inte rac tion. This pape r reconstructs Sche lling's idea of individual rationality and highlights the importance of his work in explaining the microfoundations of individual and social behavior. It also argues that Shelling’s studies on rational (irrational) behavior enlarge the analytical spectrum of economic research. Finally, it suggests some theoretical and methodological implications of Schelling's theory of rational behavior for increasing the positive and normative power of economic models of social interaction .
Rationality as a Collection of Attributes: Theoretical and Methodological Implication of Schelling’s Theory of Rational Behavior for Cognitive Economic Theory
AMBROSINO, Angela;BIANCONE, Paolo
2013-01-01
Abstract
One of the reasons for Schelling's Nobel Prize award is his propensity to consider aspects neglected by the existing theory and to develop new concepts and analytical tools, thereby extending the scope of economic analysis. One of his main contributions is a wider interpretation of the concept of rationality and rational behavior. Even if Schelling has always claimed that his work belongs within the bounda ries of the perfect ra tiona lity a pproach, close inspection of it reveals a more complex idea of human rationa lity. Starting from his Strategy of Conflict (1960) and continuing with his later studies on substance abuse and habitual behavior, until his last Strategy of Commitment (2006), it seems possible to outline an evolving concept of rationality. Individual rationality is described as a collection of attributes, and individuals are considered to be involved in two different levels of strategic interaction: the first taking place within individuals, among the different selves that people seem to embody, and the second referring to social inte rac tion. This pape r reconstructs Sche lling's idea of individual rationality and highlights the importance of his work in explaining the microfoundations of individual and social behavior. It also argues that Shelling’s studies on rational (irrational) behavior enlarge the analytical spectrum of economic research. Finally, it suggests some theoretical and methodological implications of Schelling's theory of rational behavior for increasing the positive and normative power of economic models of social interaction .
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