Perfect rationality

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In economics and game theory, the participants are sometimes considered to have perfect rationality: that is, they always act in a way that maximizes their utility, and are capable of arbitrarily complex deductions towards that end. They will always be capable of thinking through all possible outcomes and choosing that course of action which will result in the best possible outcome.

Economic rationality is distinct from superrationality in that it predicts that rational players will always follow a dominant strategy, that is, players never take into account how their decision will be echoed by others when making up their minds. Economic and game-theoretic rationality is completely individualistic.

[edit] See also

• Rationality
• Rational choice theory
• Superrationality
• Homo economicus
• Bounded rationality
• Dynamic inconsistency

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