Essay on Are People Rational

3375 Words Nov 6th, 2011 14 Pages
Everyday people make decisions that affect themselves and other parties. This essay will discuss if people are rational and if people are reasonable. In particular will be focusing on whether people are rational in the economist’s sense, and, reasonable in the lawyer’s sense and whatever the outcome, does it matter? It is an important matter as peoples actions have effects, externalities on others, on third parties and it is significant to understand why people act the way they do and comprehend how this behavior is useful for lawyers and economists in their professions.
In order to begin discussing whether people are rational a clear definition is needed. Being rational is classified as being consistent with or based on or using reason,
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Furthermore, there are more and more pressing constraints on people’s mental abilities to cope with vast amounts of information on a daily basis because of the ever increasing flow of information in modern complex and sophisticated societies leaving people to, at times, not always act rationally because of the overload of information. Occasionally it is the opposite problem, sometimes people do not always have enough information, or the right information to make an informed rational decision. Within economics, this is where market regulation comes into play and forces people to act as rationally as possible, even if it is not in the individuals best interest, the government may have a societies interest as a whole in mind. Nevertheless, people do generally act in rational ways and it is helpful within economics to assume people are rational in order to make assumptions and theories within economics. The term rational comes from the Latin word ratio. Reasonable also comes from the same Latin word although today has a slightly different meaning. Just as economists assume people are rational, lawyers assume people are reasonable. In order to even start discussing whether people are reasonable a clear definition is needed. Being reasonable is classified as showing reason or sound judgment, making a sensible choice or being a sensible person (Allen 2005). It is also described as being fair, just and free from favoritism, self-interest, bias, deception and conforming with

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