F. A. Hayek and the Rationality of Individual Choice

Abstract

An underappreciated aspect of F. A. Hayek’s mature views about rationality is the inter-relation of the “pure logic of choice” and rule-following behavior. Sometimes it is asserted that Hayek abandoned his earlier understanding of individual rationality and replaced it with a completely rule-oriented conception of decisionmaking. In fact, however, the analysis in Hayek’s Sensory Order gives us the framework in which the relative roles of explicit choice-logic and rule-following can be discerned. Furthermore, this framework also shows that his fundamental conception of individual rationality is pragmatic, contextual, modifiable, and ecological. While standard neoclassical economists were axiomatizing the explicit logic of choice, Hayek was decades ahead of these economists in understanding the nature of decisionmaking outside of completely artificial worlds in which there are no cognitive limits and in which the structure of the environment is simple. This paper attempts to lay the foundation for an integrated understanding of Hayek’s pragmatic rule-following rationality and the “ecological rationality” of Gerd Gigerenzer and other researchers.

Citation

Rizzo, M.J. (2016), "F. A. Hayek and the Rationality of Individual Choice", Revisiting Hayek’s Political Economy (Advances in Austrian Economics, Vol. 21), Emerald Group Publishing Limited, Leeds, pp. 21-39. https://doi.org/10.1108/S1529-213420160000021002