Editing Rational choice model (section)

===Philosophical critiques===
[[Martin Hollis (philosopher)|Martin Hollis]] and [[Edward J. Nell]]'s 1975 book offers both a philosophical critique of [[neo-classical economics]] and an innovation in the field of economic methodology. Further, they outlined an alternative vision to neo-classicism based on a rationalist theory of knowledge. Within neo-classicism, the authors addressed [[consumer behaviour]] (in the form of indifference curves and simple versions of [[revealed preference theory]]) and [[marginalist]] producer behaviour in both product and factor markets. Both are based on rational optimizing behaviour. They consider imperfect as well as perfect markets since neo-classical thinking embraces many market varieties and disposes of a whole system for their classification. However, the authors believe that the issues arising from basic maximizing models have extensive implications for econometric methodology (Hollis and Nell, 1975, p.&nbsp;2). In particular it is this class of models – rational behavior as maximizing behaviour – which provide support for specification and identification. And this, they argue, is where the flaw is to be found. Hollis and Nell (1975) argued that [[positivism]] (broadly conceived) has provided neo-classicism with important support, which they then show to be unfounded. They base their critique of neo-classicism not only on their critique of positivism but also on the alternative they propose, [[rationalism]].<ref>For an in-depth examination of rationality and economic complexity, see Foley (1998). For an account of rationality, methodology and ideology, see Foley (1989, 2003).</ref> Indeed, they argue that rationality is central to neo-classical economics – as rational choice – and that this conception of rationality is misused. Demands are made of it that it cannot fulfill. Ultimately, individuals do not always act rationally or conduct themselves in a utility maximising manner.<ref>Somewhat surprisingly and independently, Hollis and Nell (1975) and Boland (1982) both use a ‘cross sectional approach’ to the understanding of neo-classical economic theory and make similar points about the foundations of neo-classicism. For an account see Nell, E.J. and Errouaki, K (2011)</ref>

[[Duncan K. Foley]] (2003, p.&nbsp;1) has also provided an important criticism of the concept of ''rationality'' and its role in economics. He argued that<blockquote>“Rationality” has played a central role in shaping and establishing the hegemony of contemporary mainstream economics. As the specific claims of robust neoclassicism fade into the history of economic thought, an orientation toward situating explanations of economic phenomena in relation to rationality has increasingly become the touchstone by which mainstream economists identify themselves and recognize each other. This is not so much a question of adherence to any particular conception of rationality, but of taking rationality of individual behavior as the unquestioned starting point of economic analysis.</blockquote>

Foley (2003, p.&nbsp;9) went on to argue that<blockquote>The concept of rationality, to use Hegelian language, represents the relations of modern capitalist society one-sidedly. The burden of rational-actor theory is the assertion that ‘naturally’ constituted individuals facing existential conflicts over scarce resources would rationally impose on themselves the institutional structures of modern capitalist society, or something approximating them. But this way of looking at matters systematically neglects the ways in which modern capitalist society and its social relations in fact constitute the ‘rational’, calculating individual. The well-known limitations of rational-actor theory, its static quality, its logical antinomies, its vulnerability to arguments of [[infinite regress]], its failure to develop a progressive concrete research program, can all be traced to this starting-point.</blockquote>

More recently [[Edward J. Nell]] and Karim Errouaki (2011, Ch. 1) argued that:<blockquote>The DNA of neoclassical economics is defective. Neither the [[induction problem]] nor the problems of [[methodological individualism]] can be solved within the framework of neoclassical assumptions. The neoclassical approach is to call on rational economic man to solve both. Economic relationships that reflect rational choice should be ‘projectible’. But that attributes a deductive power to ‘rational’ that it cannot have consistently with positivist (or even [[Pragmatism|pragmatist]]) assumptions (which require deductions to be simply analytic). To make rational calculations projectible, the agents may be assumed to have idealized abilities, especially foresight; but then the induction problem is out of reach because the agents of the world do not resemble those of the model. The agents of the model can be abstract, but they cannot be endowed with powers actual agents could not have. This also undermines methodological individualism; if behaviour cannot be reliably predicted on the basis of the ‘rational choices of agents’, a social order cannot reliably follow from the choices of agents.</blockquote>