Whereas this is the case, there is a need to observe that rationality in psychology often adopts a different approach from the one adopted in economic. To begin with, from a psychology point of view, despite the fact that human beings endeavour to make rational decisions, such decisions are often marred with imperfections and/or biases (Daft, 2008; MacDonald and Dunbar, 2007). In reference to Daft (2008), people have limits or rather boundaries that determine the extent of their rationality. MacDonald and Dunbar (2007) emphasise this in their argument that there are limits that constrain human cognition such as limited information, resources, time and knowledge among others factors, which introduce imperfections in the decisions that individuals make, thus undermining their rationality. Thus, rationality from the perspective of psychology differs from economic perspective in the sense that whereas the latter perceives rationality as maximisation of utility, the former implies that due to limitations imposed upon human cognition, rationality may not necessarily imply maximisation of utility. For instance, whereas a manager of a particular firm may perceive an opportunity that could lead to maximisation of profits, due to limitations of time and resources, the manager may make decisions that would not necessarily lead to maximisation of profits. Similarly, whereas consistency in preferences plays a critical role in determining the rationality of an individual’s decisions from an economic perspective, this is not necessarily the case from the psychology’s perspective. On the contrary, due to the changes in the limitations that impact human cognition, individuals in society are likely to change their preferences and as such, change the decisions. For instance, a manager is likely to make risk averse decisions when the firm he or she is leading has limited fund but engage in risky investment behaviour when such a firm has extra financial resources.
One of the strengths of perceiving rationality as making decisions that maximises utility is founded on the fact that this conventional view helps the decision maker to conserve resources through improving efficiency. In this case, Ogu (2013) observes that through seeking to maximise utility, the decision maker is likely to shun decisions that would lead to wastage of resources. For instance, a manager who seeks to maximise profits in a firm will only channel resources towards projects and activities that benefit the firm. Apart from this, rationality from utility maximisation and consistency perspectives seek to reduce distortions and errors through considering different alternatives and ensuring that the decisions that are made are consistent over a period of time. Whereas this is the case, there is a need to observe that the conventional view of rationality in economics undermines the decision maker’s ability to make engage in risky activities or decision (Andersson et al., 2016). In this case, individuals who subscribe to the concepts of conventional view of rationality as is perceived in economics are unlikely to take risks despite the fact that such actions could lead to better benefits or higher profits. For instance, a manager who adheres to this conventional view of rationality is unlikely to invest in new markets for fear that the firm has a higher chance of losing its investments in such a market. Speaking from this point of view, since individuals who subscribe to this view are risk averse, they are likely to lose opportunities because of their fear to engage in risky decision making actions. In addition to this, the conventional view of rationality in economics undermines innovation in the sense that it does not encourage the exploration and adoption of new ideas. On the contrary, it encourages the maintenance of the status quo with regard to making decisions both a personal and a corporate level.
将理性视为做出效用更大化的决策的优势之一是，这种传统观点有助于决策者通过提高效率节约资源。在这种情况下，Ogu（2013）观察到，通过寻求效用更大化，决策者可能会回避会导致资源浪费的决策。例如，寻求公司利润更大化的经理只会将资源引导到有利于公司的项目和活动上。除此之外，效用更大化和一致性观点的合理性试图通过考虑不同的备选方案并确保所做的决策在一段时间内保持一致来减少扭曲和错误。在这种情况下，需要注意的是，经济学中关于理性的传统观点削弱了决策者参与风险活动或决策的能力（Andersson et al.，2016）。在这种情况下，尽管这些行动可能带来更好的利益或更高的利润，但在经济学中接受传统理性观概念的个人不太可能承担风险。例如，坚持这种传统理性观点的管理者不太可能投资新市场，因为他们担心公司在新市场失去投资的可能性更大。从这个角度讲，由于认同这一观点的个人是风险厌恶者，他们很可能会因为害怕参与风险决策行为而失去机会。除此之外，经济学中关于理性的传统观点破坏了创新，因为创新不鼓励探索和采纳新思想。相反，它鼓励在个人和公司层面的决策方面维持现状。
2. All Individual choices should be unrestricted. What is good for each individual at any given point should only be decided based on his or her interests. Do you agree with this statement? Justify your answer.
One of the issues that often emerge regards whether all individual choices should be unrestricted, thus allowing every individual to choose what is good for them at any given time based on their own interests. In this regard, the proponents of unrestricted choices argue that individuals in society need to enjoy the freedom of choice based on their interests and preferences without any form of limitation (Tsesis, 2017). In this regard, these proponents assume that individuals are always rational when making their choice irrespective of whether they face human cognition limitations or not. Importantly, the proponents argue that the pursuit of unrestricted individual choice is instrumental in helping individuals in society make choice that fully satisfy their needs and maximises their utility.