Rationality in context : On inequality and the epistemic problems of maximizing expected utility





Faculty/Professorship: Political Theory  
Author(s): Klein, Dominik ; Marx, Johannes  ; Scheller, Simon
Title of the Journal: Synthese : an international journal for epistemology, methodology and philosophy of science devoted to present-day cultural and scientific life
ISSN: 0039-7857
Publisher Information: Dordrecht [u.a.] : Springer Science+Business Media
Year of publication: 2018
Volume: 2018
Pages: 24 ; Online-Ressource
Language(s): English
DOI: 10.1007/s11229-018-1773-0
Abstract: 
The emergence of economic inequality has often been linked to individual differences in mental or physical capacities. By means of an agent-based simulation this paper shows that neither of these is a necessary condition. Rather, inequality can arise from iterated interactions of fully rational agents. This bears consequences for our understanding of both inequality and rationality. In a setting of iterated bargaining games, we claim that expected utility maximizing agents perform suboptimally in comparison with other strategies. The reason for this lies in complex feedback effects between an agents’ action and the quality of beliefs used to calculate expected utility. Consequentially, we argue that the standard notion of rationality as maximizing expected utility is insufficient, even for certain standard cases of economic interaction.
Keywords: Inequality, Rationality, Agent-based modelling, Bargaining, Rational Choice
Peer Reviewed: Ja
International Distribution: Ja
Type: Article
URI: https://fis.uni-bamberg.de/handle/uniba/45884
Year of publication: 19. July 2019