The theory of rational choice has become the predominant theory of human behavior in many
of the social sciences. The theory holds, among other things, that individuals are rational
utility-maximizers and that organizations are rational profit-maximizers. Recent developments
in cognitive psychology and in economics suggest that human beings have significant cognitive
imperfections that make the routine applicability of the theory of rational choice questionable.
The article reviews these developments and, by addressing examples from the field of law and
economics, shows how an awareness of cognitive imperfections can help to devise better public
policy.
Get full access to this article
View all access options for this article.
References
1.
Anderson, J. R. (1985). Cognitive psychology and its implications (2nd ed.). Boston: Addison-Wesley.
2.
Coffee, J. C., Jr. (1981). " No soul to damn; no body to kick": An unscandalized inquiry into the problem of corporate punishment. Michigan Law Review, 79, 386.
3.
Cohen, L. J. (1978). The probable and the provable. Oxford, England: Oxford University Press.
4.
Cooter, R. D., & Ulen, T. S. (1988). Law and economics. Glenview, IL: Scott, Foresman.
5.
Dawes, R. (1988). Rateonal choice in an uncertain world. Orlando, Fl: Harcourt Brace Jovanovich.
6.
Deshpande, R. & Kohli, A. (1989). Knowledge disavowal: Structural determinants of information processing breakdown in organizations. Knowledge, 11, 155-169.
7.
Eister, J. (1980). Ulysses and the Sirens. Cambridge, England: Cambridge University Press.
8.
Elster, J. (1982). Sour grapes . Cambridge, England: Cambridge University Press.
9.
Eister, J. (1987). The multiple self. Cambridge, England: Cambridge University Press.
10.
Festinger, L. (1957). A theory of cognitive dissonance. Stanford, CA: Stanford University Press.
11.
Finkelstein, M., & Fairley, W. (1970). A Bayesian approach to identification evidence. Harvard Law Review, 83, 489.
12.
Fodor, J. (1983). The modularity of mind. Cambridge, MA: MIT Press .
13.
Kahneman, D., Knetsch, J. L., & Thaler, R. ( 1986). Fairness as a constraint on profit-seeking: Entitlement in the market. American Economic Review, 76(4), 728-741.
14.
Kahneman, D., & Tversky, A. (1983). The framing of decisions and the psychology of choice. In D. Kahneman, A. Tversky, & P. Slovic (Eds.), Judgement under uncertainty: Heuristics and biases . New York: Cambridge University Press. (Reprinted from Science, 1981, 211(4481),453-458.
15.
Kahneman, D., Tversky, A , & Slovic, P. ( 1983). Judgment under uncertainty: Heuristics and biases. New York: Cambridge University Press.
16.
Johnson, P. (1988). The computer and the mcnd. Cambridge, MA: Harvard University Press.
17.
Karni, E. (1986). Decisions under uncertainty. Baltimore: Johns Hopkins University Press.
18.
Kaye, D. (1979). The laws of probility and the law of the land. University of Chicago Law Review, 47, 34.
19.
Lempert, R. O., & Saltzburg, S. A. (1983). A modern approach to evidence , (2nd ed.). St. Paul, MN : West Publishing.
20.
Machina, M. (1987). Choice under uncertainty: Problems solved and unsolved. Journal of Economic Perspectives, 1, 123.
21.
Marwell, G., & Ames, R. E. (1979). Experiments on the provision of public goods. 1. Resources, interest, group size, and the free-rider problem . American Journal of Sociology, 84(6), 1335-1360.
22.
Minsky, M. (1987). The society of mind. New York: Simon & Schuster .
23.
Nesson, C. (1979). Reasonable doubt and permissive influence: The value of complexity. Harvard Law Review, 92, 1187.
24.
Nesson, C. (1985). The evidence or the event? On judicial proof and the acceptability of verdicts. Harvard Law Review, 98, 1357.
25.
Penrose, R. (1989). The emperor's new mind. Oxford, England: Oxford University Press.
26.
Schelling, T. C. (1986). Choice and consequence. Cambridge, England: Cambridge University Press.
27.
Searle, J. (1986). Mind, brain, and science. Cambridge, MA: Harvard University Press.
28.
Shavell, S. (1988). An economic analysis of accidents. Cambridge, MA: Harvard University Press.
29.
Sternberg, S. (1966). High-speed scanning in human memory. Science, 153, 652.
30.
Tribe, L. (1971). Trial by mathematics: Precision and ritual in the trial process. Harvard Law Review , 83, 1329.
31.
von Winterfeldt, D., & Edwards, W. (1988). Decision analysis and behavioral research. Cambridge, England: Cambridge University Press.
