Perfect Rationality vs Computing

Between the "perfect rationality assumption" (which classical economics rely on) and many branches of computer science, "neither can live while the other survives".

(as between Lord Voldemort and Harry Potter)

Perfect rationality is a key assumption in economic theories. Under the Perfect Rationality assumption, everyone is capable of making the right decision every time, given what he/she knows.

Computer scientists argue that many problems are too laborious to compute. Chess is one such example: we still don't know what the "best" opening move is.

Most economists know that this assumption is unrealistic. But they believe that this is approximately true. They believe that relaxation of this assumption won't change the results very much. Unfortunately, it does. Depending on what assumptions one makes about the rationality of a decision maker, some problems take a lifetime to solve. Many computer scientists specialize in studying details of algorithms, because they matter. Half of artificial intelligence research is about how to search efficiently (the other half being "how to represent knowledge"). Everything in operational research is about searching efficiently.

So if one accepts the perfect rationality assumption, or assumes that it is approximately true, one is suggesting that many branches of computer science and operational research can be taken for granted.

Maintained by: Edward Tsang; Created: 2012.03.21