Economy and Society describes two types of social action with this property, one instrumental and one value-focused.
A 1985 paper by George Akerlof and Janet Yellen shows that second-order deviations from this property can have first-order effects on welfare. Economy and Society describes two types of social action with this property, one instrumental and one value-focused. Formally, a preference relation has this property if it is transitive and complete, and the Allais Paradox pertains to the absence of this property in experimental settings. A seminal 1961 paper argues that expectations of price movements are predictions under the relevant economic theory, and hence those expectations possess this property. Subsequent models that employ this approach to expectation formation were popularized by (*) Robert Lucas and imply a vertical Phillips Curve. Weber defined a society of legal authority as one where these kinds of rules predominates, and he compared this property to an iron cage. For 10 points, name this assumption about individuals' behavior made by most economic models.
A 1985 paper by George Akerlof and Janet Yellen shows that second-order deviations from this property can have first-order effects on welfare.
rationality [accept word forms]