Rational choice and categorical reason.

• Author: Chapman, Bruce
• Position: Preferences and Rational Choice: New Perspectives and Legal Implications

1. RATIONALITY AS A NORMATIVE IDEAL

   The theory of rational choice, as understood by most economists and many other social scientists, has both a normative and a positive content. Normatively, it points to what should be done maximally to achieve some given end, and, while it might not prescribe any particular end, it points to what it is to have a consistent set of ends that are capable of being so maximized. For example, if an agent had a set of ends that gave rise to a cyclical ordering of available alternatives, that is, if she preferred x to y, y to z, and z to x, it would not be possible for her to choose any one of these alternatives without another of the alternatives being preferred to it according to her own criteria for choice. In other words, it would not be possible for her to satisfy completely, or maximize, her own ends. (1)

   Positively, the theory of rational choice is used to describe, explain, and predict human behavior. Agents are assumed generally to behave in an internally consistent way that can be rationalized by the theory of maximization. (2) Thus, if an agent has already chosen alternative y over alternative z, and then chooses alternative x over alternative y, the assumption, and prediction, will be that the agent will choose alternative x over alternative z.

   Recently, the positive theory has come under attack from experimental psychologists and economists. (3) Their experimental results, gathered together under the banner of behavioral analysis, show that the maximizing model of rational choice often does not provide a very accurate account of how agents actually choose. Moreover, the departures from the model appear systematic rather than random, suggesting that something other than maximization is going on.

   However, the general tenor of these studies is not to question the normative ideal of maximization. Rather, the departures from the standard account of rational choice are typically characterized, and criticized, as failures to be rational. Agents are only human beings, after all, and human beings are subject to the limitations that must, inevitably and systematically, arise out of personal biases, limits on the salience and availability of important information, and the distorting effects of how a given problem is framed. Thus, real-world agents are only, it is said, capable of a "bounded rationality," using "rules of thumb" and various "heuristics" (sometimes helpful, sometimes not) rather than the fully fledged maximizing rationality that is still largely accepted as the ideal for rational choice. (4)

   In this Article, I argue that for many decision-making problems, the normative account of rationality that animates rational choice theory, and not just the positive account that is criticized by the behaviorists, is deficient, even as a theory of ideally rational behavior. Rationality, I shall suggest, provides for an ordered particularity, including particular decisions, but the notion of an ordering that informs this alternative account of ideally rational behavior, and which is more appropriate in some decision-making contexts (including many legal ones), is very different from the idea of an ordering that informs the standard account within rational choice theory. The latter, which, as already suggested, is closely allied to the idea of maximization, remains largely quantitative and single-minded in its orientation, this despite the pluralism of motivations that it appears to be able and willing to accommodate within its seemingly minimalist structure. (5) The alternative account is more qualitative, or categorical (although not absolute), offering a conception of a rational ordering of particularity that is more allied to the idea of an understanding or interpretation (under rules or principles) than it is to maximization. (6) At the risk of importing some unnecessary baggage, but for reasons that I hope will become clearer as the argument unfolds, I refer to this alternative conception of rationality as categorical reason. If that phrase suggests a longstanding rationalist tradition, exemplified by Kant, but rejected by the British empiricists like Hobbes and Hume, who are the most likely intellectual ancestors of contemporary rational choice theorists, that is not entirely unwelcome. (7)

   The real challenge for this Article, however, is not so much to articulate two alternative accounts of rationality that have had some traditional followers, but to begin to make each accessible to the other within some common intellectual framework. While I think rational choice theory provides a useful and precise set of tools for beginning this process of achieving mutual understanding between the traditions, I shall argue that some quite fundamental postulates of rational choice theory (including some of the axioms of choice consistency and strong independence) will have to be relaxed if the contributions of categorical reason are properly to be accommodated within it. However, I hope to show that there is much advantage in this, even for what the rational choice theorist hopes to achieve, and to illustrate the point by reference to some systematic difficulties that the rational choice theorist faces in the theory of social choice and game theory.

   Part II reviews the results of some recent behavioral experiments that suggest that agents respond to reasons in a way that is not always consistent with some of the fundamental axioms of (value-based) rational choice. I look at choice involving certain and uncertain alternatives, and focus on the weak axiom of revealed preference in the former and the sure thing principle in the latter. My claim is that while some of the choices that some of these experimental subjects make do seem problematic from a rational point of view, sensible scenarios can be constructed that make good sense of these systematic violations of the rationality axioms.

   In Part III, I argue that common law adjudication manifests the same tension between reason-based choice and conventional (value-based) rational choice that was shown in the experiments. However, I argue that the common law idealizes reason-based choice, insisting not only that a claimant be right, but that a claimant be right and rational--that is, right for the right reasons. I refer to this reason-based ideal as categorical reason.

   In Part IV, I suggest that the idea of categorical reason can be useful both in the theory of social choice and in the theory of non-cooperative games. In social choice, categorical reason brings a kind of conceptual discipline to the preferences that can be admitted into social choice, and this helps to avoid certain problems of instability and collective irrationality. In the theory of games, categorical reason publicly organizes the particularity of individual agents' choices so that coordination and cooperation are more likely to occur.

2. RATIONAL CHOICE BEHAVIORISM AND REASON-BASED CHOICE

   1. The Case of Certainty

      One might have thought, or even hoped, that a theory of rational choice would have informed us about how people think or deliberate about their decisions, or about how their choices are explained or justified by reasons. That, typically, is how a legal theorist would understand the obligation to offer an account of rational decision making. At the end of their article on "reasons," for example, John Gardner and Timothy Macklem conclude that rationality "is simply the capacity and propensity to act (think, feel, etc.) only and always for undefeated reasons." (8)

      However, the agenda for developments in the economic theory of rational choice has, apparently, been one of psychological reductionism. The idea, which began with Vilfredo Pareto's replacement of cardinal with ordinal utility as a motivation for choice in the early part of the twentieth century, (9) has been to rely less and less on any claims about what might be going on in someone's head. (10) With the advent of revealed preference theory, as originally developed by Paul Samuelson in the 1930s, (11) the expunging of anything psychologically substantial that might explain a set of rational choices, like the maximization of self-interest, utility, or, now, even preference, is more or less complete. What matters for rationality is the consistency of externally observable behavior, not any particular subjective motivation. (12) This reliance on what is objectively observable is typically thought to be "scientifically more respectable" (13) than any attempt to speculate about, and model, private thoughts, motivations, or reasons.

      Of course, the requirements of a rational consistency of observable choice are not unrelated to the requirements of a rational maximization of unobservable preference or utility. Indeed, the former, while considered a fully autonomous subject matter for the scientific and systematic study of choice, is still typically thought capable of being "rationalized" by the latter. Thus, Samuelson's Weak Axiom of Revealed Preference ("WARP"), (14) which is still the central postulate of the new behaviorism in cases of choice over certain outcomes, has been shown to be logically implied by, and consistent with, what would be chosen by a rational maximizer of preferences. (15) According to WARP, if an agent ever chooses an alternative x over alternative y from some set of alternatives, then that agent should never (on pain of inconsistency) choose alternative y over alternative x from any other set of available alternatives. (16)

      One is tempted to add "unless, of course, her preferences have changed," but this would be to seek refuge in a preference-theoretic explanation of a possible departure from what is supposed to be a purely choice-theoretic requirement. Nevertheless, the temptation is revealing in that it shows what really lies behind WARP as a plausible requirement for rational choice. The idea, surely, is that an ideally rational agent can arrange all conceivable...