Is the Stable Preference-Based Utility Maximization a Good Account of Rationality?

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The Wharton School::Wharton Undergraduate Research::Joseph Wharton Scholars
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Business
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Economics
Utility Maximization
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2023
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Shirai, Ayana
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It is commonplace for economists to use the model of utility maximization to describe consumer behaviors. It is a big part of economic modeling, included in most undergraduate economics courses. The model is constructed by making a certain set of assumptions about preferences, assigning ordinal utility to the preferences with such assumptions, and thereby modeling agents mathematically as maximizing utility. I call the constructed model a stable preference-based utility maximization. Economists often call the agents described under stable preference-based utility maximization rational because they take the assumptions about preferences to be assumptions of rationality. Calling the model, a model of rational agents, leads to implicit normative claims in economics about what a good society is. For example, it allows them to claim that the maximization of welfare, calculable using the individual utility maximization model, captures what is important to do as a society. In other words, by assuming that agents are rational, they could insist that we have reasons to support markets if they help rational agents. This makes economics at least partially normative, despite the claimed descriptive nature of the field.

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2023
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