Rationality and bounded rationality: you can’t have one without the other

Abstract

This article compares and contrasts the various perspectives on rationality and bounded rationality, and in doing so, advances two claims. The central one is that the definition of rationality depends on bounded rationality. This is reminiscent of debates in philosophy concerning the definition of concepts in terms of their opposites, which has led to efforts to destabilise dichotomies. In addition, as argued in this article, there is a related connection between the (bounded) rationality of economists and the agents they study.