Rationality and Chaos
Updated: 29th Nov. 2012 This is an entry I have wanted to do for some time. It is the first of three fractal insights I have discovered into economic assumptions (rationality, ceteris paribus, and perfect knowledge). This is a very difficult subject to describe; I hope I give it justice. Understanding rationality is closely related to—if not the same as—understanding 'chaos': that is, complex systems are unpredictable. If we are to understand rationality, then we should understand chaos and, thus, fractals. The definition of the fractal (attractor) is: same but different , at all scales. In our Economic models, we use the assumption ceteris paribus: we hold all other variables constant and treat all persons as rational to see the order (or the 'same', as in the definition) amongst complexity - just as other sciences do. This definition may be adapted or interpreted in this context of rationality to read as rational but irrational at all scales. This is to say that ...