Rationality In Society Research Paper

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Human behavior is rational when appropriate to its goals. The brain provides the biological foundation for human rationality; it accepts sensory stimuli from both the natural and social environments and stores knowledge, beliefs, and values that guide the thought processes leading to action. This research paper focuses upon the social environment of human rationality.

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Rationality has been an object of scholarly analysis since Greek times, but largely as part of ethics, in its concern with goals, sound reasoning and logic. Empirical study of human rational behavior is mostly quite recent, although we find such significant precursors as Machiavelli. Even Adam Smith provides no explicit theory of rationality in his Wealth of Nations, and such theories begin to appear only in the nineteenth century (e.g., Cournot 1838), initially in economics and, much later, in sociology (Parsons 1937). In the twentieth century, utility theory took shape in economics, while more realistic but less formal theories of rationality developed in the other social sciences.

1. Theories Of Rationality

The social context molds behavior in three main ways. First, it largely determines what actions are available. Second, choice must try to anticipate the reactions of others to contemplated actions. Third, people’s society is the major source and shaper of the knowledge, skills, and goals they use in choosing actions.

Hence, although a large part of today’s understanding of rationality derives from psychological experiments with individuals, most of the contents of individuals’ knowledge and beliefs, and their cognitive processes derive from social sources. Moreover, experimental stimuli themselves often are stated in language that has rich social content. Thus, even ‘individual’ psychology is the study of highly socialized beings (Simon 1992). The entrepreneur and consumer of economics, the voter and legislator of political science, the husband and delinquent, and soldier of sociology and anthropology are deeply social.

1.1 The Rationality Of Experts

Cognitive psychology has acquired substantial knowledge about the decision-making of experts and novices in such professional domains as medical diagnosis, chess-playing, and scientific discovery, and has successfully simulated these behaviors on computers (Anderson 1999, Newell and Simon 1962, Shrager and Langley 1990). Within the professional domain, an expert employs two main procedures: (a) recognizing familiar situations and patterns that give access to knowledge in memory about handling these situations; and (b) searching selectively for satisfactory problem solutions, guided by learned rules of thumb, or heuristics. The same procedures are used to find better problem definitions and representations, instruments and tools for observing or reasoning, experimental designs, and search strategies. They even account for the problem solving that is called ‘intuitive,’ ‘insightful,’ or ‘creative.’

1.2 Rationality As Utility Maximization

Utility maximization, the best developed formal theory of rationality, which forms the core of neoclassical economics, does not refer to the social context of action. It postulates a utility function, which measures the degree to which an individual’s (aggregate) goals are achieved as a result of their actions. The rational actor chooses the action, from among those given, which maximizes utility. If the actor’s goals are food and sleep, then rationality calls for choosing the attainable combination of food and sleep that yields the greatest utility. The core theory does not specify the content of the utility function (Simon 1983).

Without a concrete meaning for utility, the theory has few refutable consequences; its relevance to real situations depends mainly on adding auxiliary assumptions. This is not wholly true, for the theory does assume constancy of the utility function over sequences of choices. Many experiments have shown that this implication is testable—and frequently false (Tversky and Kahneman 1974). Human actors often make sequences of choices that are incompatible with any consistent utility function.

In order to predict more than consistency in any particular situation, additional strong assumptions must be added. Economic applications usually add the vastly oversimplified assumption that utility is measured by total income or wealth, which, in turn, may be expressed in terms of goods possessed. Additional assumptions introduce markets, in which goods can be exchanged (for each other or for money), and firms, which consume goods to produce other goods.

Without auxiliary assumptions, the theory is also silent about the range of available alternatives and the processes used to find the optimal action. It says nothing about how to select auxiliary assumptions, or what empirical support they should require. As a result, assumptions are often introduced in order to preserve or enhance mathematical tractability.

To produce an empirically sound theory, a much richer set of empirically based auxiliary assumptions must be provided, to take account of the actual limits on human thinking, and the influences of its social context (Green and Shapiro 1994).

1.3 Forms Of Rationality

An action may be regarded as rational because of the way it was chosen (procedural rationality), or because of its outcomes (substantive rationality).

Attributions of rationality may or may not respect the limits of actors’ abilities to adapt actions to goals. Utility-maximizing behavior, as discussed previously, selects an action that is among those objectively available, attains a real-world optimum, and is of a comprehensive function of wants and needs (utility function).

As an alternative, bounded rational behavior selects some action among those that memory, observation, and thought bring to attention. It is aimed at attaining outcomes that satisfice (attain aspirations) for the wants and needs that have been evoked (Conlisk 1996). The expert behavior described in Sect. 1.1 is an example of bounded rationality.

There is a close affinity between optimizing and substantive rationality, and an affinity between bounded and procedural rationality. The utility-maximizing optimum is independent of the choice process; the outcome is all that counts. In bounded rationality, the choice depends upon the process leading up to it. The social sciences, other than neoclassical economics, usually explicitly incorporate human cognitive limitations and social influences into their theories, using some version (seldom highly formalized) of bounded rationality. Bounded and procedural rationality require generating courses of action, assessing their possible outcomes under different futures and estimating how much satisfaction they will attain. They postulate procedures that respect human limits on knowledge of present and future, on abilities to calculate the implications of knowledge, and on abilities to evoke relevant goals (Simon 1983).

1.4 Habits, Emotion, And Motivation

Although dictionaries often define rational action narrowly, as the action chosen by reasoning, numerous actions that are rational (i.e., appropriate to goals) are taken without conscious deliberation or any deliberation at all. Rather, these rely on heredity responses, or prior knowledge and belief. Evolution has seen to it that eyes blink when something comes flying at them. Similarly, but as a result of learning and experience, when a car suddenly stops, the driver in the car behind applies brakes without deliberation. These goal-oriented, but unreflective actions make up much of the activity of everyday life, and greatly expand the capacity for (boundedly) rational response. Rationality is inextricably interwoven with emotion and motivation. Action is directed toward goals by such motivators as hunger, sexual drive, anger, fear, pride, and others. These are represented by the aspirations of bounded rationality. Evoked into consciousness, or activating ‘automatic’ responses, they provide the goals for rational choice. Additionally, cognitive processes cannot handle large quantities of information simultaneously. Deliberative and conscious thoughts have to pass through the narrow straits of short-term memory, which hold only a few symbols (approximately six), and can attend to only one thing at a time (or perhaps two or three, by alternation of attention over intervals of 1–2 seconds). Recent research using functional molecular resonance imaging to record neuronal activity has shown that even simple acts (reading a short sentence) employ a sequence of neural processes.

Because human beings must satisfy many drives, rationality fixes attention on particular goals, usually until these are satisfied, but shifts attention to other goals when they become more pressing. Interruption is triggered both by sensory processes, such as peripheral vision, and by emotions and inner drives, such as fear and hunger. So rationality, is not just a cognitive function, but depends on motivation and emotion to control attention.

2. Rationality In Social Context

The social context of action that plays such an enormous role in determining choices will now to be examined more closely.

2.1 The Sources Of Knowledge

Most of the knowledge that enters into either habitual responses or deliberate choice is received from other persons, beginning at birth. Direct experience of the nonhuman world contributes only a small fraction of what people know and believe. Language, a major tool of thought, is a social artifact (Simon 1992).

Of course, what people know is also strongly influenced by the natural environment, some of it sensed directly. Nonetheless, much of one’s knowledge of this environment is acquired by social processes, not direct sensation; sensory stimuli are interpreted by social information. People believe that cholesterol is bad for them, but their belief derives from doctors, the media, and friends, not their own laboratory experiments. The same rains fall on humankind around the world, wetting anyone it strikes. It enters into each person’s beliefs and knowledge in many ways, and social processes have created a wide range of different expedients for mitigating its discomforts and using its waters. The range of available actions and the criteria and procedures for choosing among them are largely circumscribed by the actions, criteria, and procedures discovered and propagated by each society.

2.2 The Social Sciences Are Historical Sciences

Because of the social origin of knowledge, the social and behavioral sciences are, essentially, historical, for the behavior of each person changes with the enveloping society’s states of belief and knowledge. Functionalism in anthropology and sociology has pointed out the common functions shared by all societies, but also the variety of ways in which these functions are performed in particular societies, depending on their values, beliefs, and knowledge.

Of course, dependence on history is not peculiar to the social sciences. Historical laws are found throughout natural science: in modern astrophysics, the Big Bang and its sequelae; in geology and oceanography, mountain formation and continental drift; evolutionary biology is wholly historical.

Today, the social sciences differ greatly in the extent to which their theories attend to history. Historical change in basic laws has played only a small role in utility-maximizing economic theory. The central theoretical structure in economics today, as in Adam Smith’s day, is an idealized set of markets with vestigial business firms (each characterized by a production function). Perhaps these roughly match Adam Smith’s world, but they are a far cry from the economy of large international business corporations throughout today’s world; and this model does not explain the growth (or even the possibility) of these large organizations.

On recognizing its historical dependence, a science must reexamine the meaning of natural law. It must seek to find invariant underlying relations that account for continuing change as well as equilibrium in dynamic systems. In the social sciences, temporal structural change is still absent from most formal theory.

2.3 Social Determinants Of Motives

Social modification of motives and actions is usually dealt with in contemporary social science by introducing evolutionary mechanisms (Nelson and Winter 1982). In most current versions of Darwinism, the sole effective motive is to increase fitness (essentially rate of population growth); altruism will not compete. This has often been interpreted as implying that only selfish human motives survive, and that, consequently, maximization of utility means maximization of income or wealth, profit of the business firm, or power (the latter in Public Choice Theory in political science and sociology). In this view, only the special genetics of ants and bees, and some other social insects, allow nonpropagating offspring to exhibit altruism to close kin.

However, it has been shown (Simon 1997) that, in the presence of bounded rationality, altruism may increase the fitness of altruists, and, hence, may survive and grow within a society. If bounded rationality admits a large capability for social learning, persons willing and able to learn (docile), will have a large fitness advantage over others. By natural selection the society will help individuals acquire knowledge and beliefs that usually enhance their individual fitness, but are sometimes advantageous to the society’s fitness at the individual’s expense (e.g., volunteering for military service). As long as social influence, on balance, increases individual fitness, altruism can also thrive, contributing to the fitness and growth of the society.

2.4 Altruism And Group Identification

Perhaps the most important human expression of altruism is identification with, and loyalty to, groups ranging from the family, through ethnic or religious groups, to whole societies or nations. Group identification is a major determinant both of goals (defining the ‘we’) and of knowledge and beliefs, for both are formed in the groups that people associate with in work and leisure. Identification is the primary basis for the intense within-group collaboration and between-group conflict that is an enduring characteristic of human interaction. It is also one of the bases for the ability of large organizations to coordinate human efforts efficiently.

2.5 Organizations

In a modern society, formal work organizations— companies, government agencies, schools—provide environments for a large fraction of human waking hours (Simon 1997). This has presumably come about because organizations can, through appropriate specialization and coordination of activities, enormously increase individual productivity. Effective specialization requires dividing up activities in such a way that each specialty calls on only a small part of the knowledge and skill that is required for the whole, and each component is mainly concerned with the initial inputs and final outputs of the others, and need not be involved with their internal processes.

At the same time, it is rarely possible to obtain complete independence among components, so that some provision, often involving the exercise of authority, must be made for securing coordination where it is required (the axles that one department makes must fit the wheels made by another). The theory of organizations, in business and public administration, is concerned with the architectural arrangements that secure a good balance of specialization and coordination, and the means of using authority, organizational identification and rewards to secure acceptance of the structure by those who inhabit it. Because of the difficulty of measuring the precise contributions of individuals’ work efforts to an organization’s product and success, economic incentives cannot account for the high level of support for organization goals that is often observed (for example, in the behavior of employees who do not share in profits or bonuses). Much of this support can be attributed to organizational identification, and it is one of the novelties of the modern world (with perhaps some precedents in armies, even of the distant past) that strong loyalties can be evoked by formal organizations as well as by more traditional social groups. Human attachment to organizational goals has been a major force in converting the market economy of Adam Smith’s time into the very different organizations-cum-markets society of the present (Simon 1997).

Recent developments in the formal theory of complex organizations also suggest that a delicate balance between specialization and coordination is essential if large systems are to innovate and continue to evolve successfully. Excessive need for coordination prevents one unit from evolving without damaging the efficiency of others; excessive independence of components limits the sophistication of the products of the whole organization.

2.6 Social Structure

Although more nebulous than formal organizations, the framework of laws and customs of a whole society also provides an important object of identification for members, and in particular a stable cognitive framework within which a creature of bounded rationality can operate with some probability of predicting correctly the consequences of action. An important component of the structure of most societies is a system of markets and social practices that maintain them. Every modern industrial society is a composite system of organizations-cum-markets, where the markets permit a considerable degree of decentralization and independence of action of the individual organizations. The division of labor in the social sciences between organization theorists, on the one hand and economists on the other has left something of a lacuna in our understanding of the interactions between these two prominent kinds of social structure.

2.7 Mutual Expectations: Game Theory

What concept of rationality suits situations where several or many actors have competitive but highly interdependent goals? Cournot raised the problem in 1838 of two or more firms competing in an imperfectly competitive market, and threatening market instability by trying to outguess each other. Although von Neumann and Morgenstern (1944), in their Theory of Games and Evolution, proposed a solution to the problem, they defined rationality in a rather implausible way that did not guarantee unique choices or equilibria (Aumann and Sergiu 1992). Although their work has had a large impact, especially in economics and international relations theory, its most important result has been to show the near-impossibility of framing a univocal ‘logical’ definition of rationality in conditions of mutual uncertainty and interdependence. The ambiguities can sometimes be resolved by retreating from utility maximizing to bounded rationality, and by determining empirically which of their many options humans in fact employ in these situations (Axelrod 1980).

Political revolutions provide excellent demonstrations of the importance of stability of mutual expectations to the operation of a society. Revolutions dissolve expectations about what reactions actions will evoke from opposing groups. This ‘gaseous’ dissolution of social structure is ultimately reversed by the ascendance to power of new groups with internal identifications strong enough to remove the uncertainties.

3. Conclusion

Today, considerable effort is going into reexamining the concept of rationality, questioning the assumptions of utility maximization theory and seeking foundations for an empirically grounded theory of bounded rationality that gives proper attention to the social environment of choice. There is considerable new experimental work, particularly experiments with markets and games where ‘outguessing’ is important, but much more empirical study, in the field as well as the laboratory, will be needed to arrive at a theory that takes full account of the limits on human cognitive capabilities, and the social context which informs human reasoning.


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