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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.
Perfect rationality is very similar to the concept of homo economicus but is more commonly used in the field of game theory. It depends less heavily on agents being self-interested (since the utility function could take any form) but rather focuses more on the notion of mathematical perfection in making complex deductions.
Perfect rationality is often compared to bounded rationality, which assumes that practical elements such as cognitive and time limitations restrict the rationality of agents.
- Rational choice theory
- Homo economicus
- Bounded rationality
- Dynamic inconsistency
- Rationality and power
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