If individuals behave irrationally in some circumstances, why do economists typically assume that they behave rationally?
A)The assumption of rationality allows economists to make powerful statements that apply the majority of the time.
B)The assumption of rationality was used before psychologists discovered ways in which individuals behave irrationally.
C)The assumption of rationality is used because economists do not understand principles of psychology.
D)The assumption of rationality has yet to be refuted with scientific evidence.

Question

If individuals behave irrationally in some circumstances, why do economists typically assume that they behave rationally?​
A)​The assumption of rationality allows economists to make powerful statements that apply the majority of the time.
B)​The assumption of rationality was used before psychologists discovered ways in which individuals behave irrationally.
C)​The assumption of rationality is used because economists do not understand principles of psychology.
D)​The assumption of rationality has yet to be refuted with scientific evidence.

Quizplus · Accepted Answer

The assumption of rationality allows economists to make powerful statements that apply the majority of the time. While individuals may behave irrationally in some circumstances, the assumption of rationality allows economists to make generalizations about behavior and predict outcomes in many situations. It is a simplifying assumption that is useful in making models and predictions.

If Individuals Behave Irrationally in Some Circumstances, Why Do Economists