I think "rational" and "irrational" have taken on domain-specific meaning in economics. This is not unusual. Ontologies and DSL are kind-of a way of life now, in any information-theoretic field.
In my space, we refer to some things as "portable" or "non-portable" which has very specific intent, which doesn't relate to if you can pick them up or not. I think loan-words which have close analogies in a few minds rapidly diverge.
So a "rational" actor in economics seem (to me at least) to mean the typical selfish bastard who only acts to maximise their own profit outcome, no matter how its defined, and excludes a green warrior buying a good or chattel to NOT use it, or somebody buying it to give to charity, or buying it to round up another charge to get north of a shipping fee but its a nonce purchase and has no intent or purpose..
its a narrow, domain-specific meaning. I think that word doesn't mean what you think it means inconceivable
>So a "rational" actor in economics seem (to me at least) to mean the typical selfish bastard who only acts to maximise their own profit outcome, no matter how its defined, and excludes a green warrior buying a good or chattel to NOT use it, or somebody buying it to give to charity, or buying it to round up another charge to get north of a shipping fee but its a nonce purchase and has no intent or purpose..
That's not true at all. Rational is defined as someone acting to maximise their utility (roughly satisfaction), which is capable of encompassing "a green warrior buying a good or chattel to NOT use it, or somebody buying it to give to charity, or buying it to round up another charge to get north of a shipping fee but its a nonce purchase and has no intent or purpose" perfectly fine.
I’ve always thought (or have been unaware of) a formal economic way of talking about this. Years ago I came up with my own definitions. “Altruism” can be defined as the part of your utility that increases because someone else’s utility increases. If you get no personal satisfaction out of something intrinsically but get satisfaction because someone else is happier, that is 100% altruistic. If you get some satisfaction but also some from the external benefit, you could tease out where it lies between 0 and 100%.
This also leads to another concept of “Malice” which would be the positive utility you get from others losing utility.
The crux to me is that often utility is talked about as only what you intrinsically get. Doing selfless things isn’t without benefit, it’s just without direct benefit and I have seen little ability to quantify it in economic terms.
>“Altruism” can be defined as the part of your utility that increases because someone else’s utility increases. If you get no personal satisfaction out of something intrinsically but get satisfaction because someone else is happier, that is 100% altruistic.
Wouldn't altruism be getting no satisfaction from increasing someone else's utility but doing it anyways?
> So a "rational" actor in economics seem (to me at least) to mean the typical selfish bastard who only acts to maximise their own profit outcome, no matter how its defined, and excludes a green warrior buying a good or chattel to NOT use it, or somebody buying it to give to charity, or buying it to round up another charge to get north of a shipping fee but its a nonce purchase and has no intent or purpose.
This is completely unrelated to what economics means by referring to a rational actor. A rational actor is just one who, given a choice, will take the action that produces the all-inclusive result they most prefer. You're talking about someone whose only preference is having the greatest amount of money, but economics contemplates all possible preference sets, which is why it measures benefit in "utils".
So what you're saying is, that in the domain of study it means something which in common parlance, nobody understands. Because when any politician gets on their hind legs to bray about rational actors and efficient markets, they sure as hell aren't talking about "utils" to the taxpayer, are they?
Let me ask you a question. Do you think the word "rational" in rational actor, rational investor and rational market, has exactly the same meaning? Do you think as people commonly understand these terms (I don't mean economists) the answer would be the same?
"Because when any politician gets on their hind legs to bray about rational actors and efficient markets, they sure as hell aren't talking about "utils" to the taxpayer, are they?"
Do you even mean this as a serious argument? Can your favorite field survive politician's (politician, from "polis", city, and "-tician", "person": 1. professional liar 2. scumbag 3. one who professionally holds office) handling of their terminology?
Nor can I find it a terribly serious argument that "common people", i.e., people who aren't in the field and don't know the definition, don't know the definition. That's just shy of begging the question, except there's a small sliver of people "in the field" who don't yet know the definitions, called students.
I'm trying my best to unpack your words into some sort of actual argument but I can't find it.
> politician, from "polis", city, and "-tician", "person"
I know you didn't really mean this, but polit/ic/ian -- "polit" is from polis, city; "ic" is a Greek adjective-forming element; and "an" or here "ian" is a Latin adjective-forming element. "Polit" is the only part of the word that bears any semantics (in the etymology). The Greek root for person would be "anthrop", which isn't present.
(The root for "man", an adult male, is "andr", which is why it's so hilarious to Italians that English speakers think Andrea is a girl's name.)
> Do you think the word "rational" in rational actor, rational investor and rational market, has exactly the same meaning?
Rational actor and rational investor, the same. Rational market, different. But I only know the term "rational market" through its use in the fixed expression "the market can stay irrational longer than you can stay solvent".
> Do you think as people commonly understand these terms (I don't mean economists) the answer would be the same?
That is because economy did not allow for bounded rationality. They're talking about optimally rational with perfect knowledge. Also known as a spherical cow.
Ultimately, rational is supposed to mean reasoned, not optimal. Heuristics can be rational if applied with reason and devised with good valid reasoning.
Even such a domain specific definition is borderline useless because there is no way to constrain the "utility" which rational agents are supposed to maximize -- which makes the concept of a rational agent tautological, and not at all predictive. ("People behave that way because they behave that way". I might encode my observations in a utility function but that doesn't suddenly help me generalize to other situations)
The other thing is that the limited situations which psychologists/economists measure people in are very artificial, and there's no reason for people to ace the experimenter's metric.
Responding to grandparent: It's not just that project are efficient and not quite correct -- they're probably more correct and scientists have no way to tell.
"If you judge a fish by it's ability to climb trees, it will live it's whole life thinking it is stupid."
Put another way, even if you take the strict definition of a rational (optimal) agent, in probably any non-trivial or non-contrived corner case, for any arbitrary set of actions, there exists some utility function and information constraint that can justify that set of arbitrary functions.
Have a set of "irrational actions"? Add in information and computational constraints and the necessity for heuristics, the exact right kind of risk-aversion / novelty-seeking behavior, (or play with the second or higher derivatives of your utility function), add in social dynamics like signaling, repeated games (or incorporate mental burdens that negate the impact of repeated games) etc. There exists some formalized universe where your agent is indeed rational.
It's really quite simple. Have you ever made a decision and then later thought "even without knowing what I know now, I made a bad choice"? That's irrationality-- given the same information, making two different choices.
> So a "rational" actor in economics seem (to me at least) to mean the typical selfish bastard
Well, a rational actor works to maximise their personal preferences effectively. You've accidentally slipped an assumption in that all people are fundamentally typical selfish bastard's with a corresponding set of preferences, but I suspect you don't actually assume that personally because of the invoking of green warriors.
A green warrior or charitable giver is still a rational actor, and adequately modeled as a normal source of demand. It just happens they need to be acting rationally in context of a larger system to themselves or basic law-of-the-jungle style effect will optimise them out. Green warriors themselves often talk about preserving the planet so people can live on it, which is clearly a personally rational goal. Charitable people will often say similar things.
Appropriate that you're talking about idiosyncratic domain specific usage of terminology, I'm not sure what you mean by "information theoretic" here. I've always heard it used to refer specifically to the information theory of Claude Shannon.
I probably randomly misused a term I overheard in some bar some time.
(I have a great picture of Claude Shannon's hand holding a literal mechanical mouse: not a modern computer mouse, a simple robot mouse he built do do maze-solving. I wish I could find it, its such a nice example of dropping words and names into another context: "Claude Shannon's mechanical mouse" means probably something completely different to what many people think. https://www.google.com/search?q=claude+shannons+mechanical+m... shows things I think it was taken from. Its a kids book on computing from the 1960s)
In my space, we refer to some things as "portable" or "non-portable" which has very specific intent, which doesn't relate to if you can pick them up or not. I think loan-words which have close analogies in a few minds rapidly diverge.
So a "rational" actor in economics seem (to me at least) to mean the typical selfish bastard who only acts to maximise their own profit outcome, no matter how its defined, and excludes a green warrior buying a good or chattel to NOT use it, or somebody buying it to give to charity, or buying it to round up another charge to get north of a shipping fee but its a nonce purchase and has no intent or purpose..
its a narrow, domain-specific meaning. I think that word doesn't mean what you think it means inconceivable