Title: The rationality of irrational decisions: a new perspective of behavioural economics

Authors: Mahmoud Yousef Askari; Ghaleb A. El Refae

Addresses: Department of Management, College of Business, Al Ain University of Science and Technology, P.O. Box 64141, Al Ain, UAE ' Department of Accounting and Finance, College of Business, Al Ain University of Science and Technology, P.O. Box 64141, Al Ain, UAE

Abstract: This paper is an attempt to contribute to the field of behavioural economics by proposing a new perspective of utility and rational decision making. We use the method of thought experiment, as well as, hypothetical examples of decision making to explain the rationality of decisions that might be seen by economics as irrational. We hypothesise that all decisions are rational at the individual level, and that all decisions are justified by decision makers and maximise the decision maker's perceived utility. To do this, we redefine rationality at the decision maker's level, and we explain how individuals customise rationales for their own actions to make decisions that maximise their perceived utility. We also redefine utility to include both tangible and intangible dimensions, and we discuss how the customisation of rationales and the perception of utility at the individual level make all decisions rational. We also propose a model to hypothetically calculate full utility attainment (maximum utility) by the individual.

Keywords: rationality; irrational decisions; perceived intangible utility; behaviour economics.

DOI: 10.1504/IJEBR.2019.099972

International Journal of Economics and Business Research, 2019 Vol.17 No.4, pp.388 - 401

Available online: 27 Mar 2019 *

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