Home/Rational Agents

In standard economic theory a “rational agent” is a model to human behavior within an economic context. The rational agent exists in the abstract, i.e. nothing in the model is contingent on context. Agents have a single conception of value, i.e. all value is reduced to a single homogeneous form called utility. Preferences and value are well-defined. Rational agents have unlimited rationality, the idea of omnipotence, i.e. they know all relevant information when making a choice, they can compute this information and all of its consequences. Within this model, agents have perfect information and any uncertainty can be reduced to some probability distribution. The agent’s behavior is then seen to be an optimization algorithm over their set possibilities, and it is thought that behavior can be altered by changing the input variables to this optimization algorithm by what we call positive incentive.