In political science, the first chapter of Essence of Decision explores this idea in the context of the Cuban Missile Crisis. Gary Becker notably applied this concept to the analysis of addiction and crime. The sequential form of this idea determines optimal strategies in a perfect Bayesian equilibrium. Herbert Simon's notion of satisficing relies on the "bounded" form of this idea, since humans are rarely mentally able t
In political science, the first chapter of Essence of Decision explores this idea in the context of the Cuban Missile Crisis. Gary Becker notably applied this concept to the analysis of addiction and crime. The sequential form of this idea determines optimal strategies in a perfect Bayesian equilibrium. Herbert Simon's notion of satisficing relies on the "bounded" form of this idea, since humans are rarely mentally able to carry out complex calculations. Utility maximization is assumed in most game theoretic situations due to perfectly exhibition of this idea. Behavior of this type is built into many macroeconomic models and is called these type of "expectations." For 10 points, name this assumption suggesting that people optimally use all available information when making decisions.
In political science, the first chapter of Essence of Decision explores this idea in the context of the Cuban Missile Crisis.
rationality [accept rational expectations since that is what is specifically referred to early on]