Rational Actors

The readings for this week brought up a great point that I think deserves a lot of attention. This point is that we often consider the entities we study to be rational actors. This is often an assumption that is used in economics, and I assume in many other social sciences as well.

In economics we assume that consumers and producers will act rationally to maximize their utility. Firms will do whatever they can to maximize their profits. Individuals will do the same. And they behave in a way that is rational and knowable. But what happens when that isn't the case? Look at the stock market, and tell me that the valuation of stocks are always based purely on rational reasoning and not on irrational considerations.

Similarly, the idea of perfect information is a common assumption. In economics, we assume that actors have perfect information and are able to act on it. However, this is rarely the case. An everyday example is how one shops for groceries. If you knew all the time exactly how much each good cost at every store, you would be able to maximize your utility by buying your desired goods at the lowest cost. But you don't know exactly how much things cost before you go to the store, so you can't make the 'rational' choice.

So, many actors in the international realm, from states down to individuals, are often irrational actors that do not have perfect information. This seems axiomatic, however keeping this in mind when looking at why actors take the measures they do is important.