Question

Much has been made of the fact that people don't consistently act with scientific rationality. What is meant by rationality? Consider the three "systematic mistakes" discussed in your text. What are the costs of making those "systematic mistakes"? Is it possible to act "irrationally," or is rationality defined by the individual's approach to decision making?

Answer 1

Rationality is a state of a person who is thinking logically according to his experience and knowledge about a particular or specific situation , and ultimately make a decison depending on his desriable efficient outcome with dependancy on factors like need,cost benefit and evaluation.

People make this three "symmetric mistakes"(i.e need,cost benefit,evaluation) very often. An overconfident person always overestimate knowledge and thus inefficiency occurs on proper risk control or conduct proper risk assessments.

When People make symmetric mistakes , it somehow directly or indirectly affect someone's life or moreover there own. People giving much importance to small no. of vivid observations are stereotype, and thus failed to imagine greater cause.When they become overconfident and start to think themselves always right, and they tend to believe that one source of data is always correct, most of the time they end up having heavy loss.

Reluctant people refuse to change their mind and tend to be reluctant to accept the truth because it requires them to acknowledge responsibility for something they have experience in their lives.They are like the overconfident risk takers and do not often want to evaluate the situation thoroughly, and thus loose the sight of greater picture. It is possible for a person’s behavior when it comes to making decisions, preferences, and expectations to be rational and irrational depending on the given situation. Most people will act rationally however there are a large number that are in the middle or act irrationally towards most situations.