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Published in:
Introduction to Man and Machines Read chapter Read first chapter

2017 | OriginalPaper | Chapter

3. Rational Choice and Rational Expectations

Authors : Tshilidzi Marwala, Evan Hurwitz

Published in: Artificial Intelligence and Economic Theory: Skynet in the Market

Publisher: Springer International Publishing

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Abstract

The theory of rational choice assumes that when people make decisions they do so in order to maximize their utility. In order to achieve this goal they ought to use all the information available and consider all the options available to select an optimal choice. This chapter investigates what happens when decisions are made by artificial intelligent machines in the market rather than human beings. Firstly, the expectations of the future are more consistent if they are made by artificial intelligent machines than if they are made by human beings in that the bias and the variance of the error of the predictions are reduced. Furthermore, the decisions that are made are more rational and thus the marketplace becomes more rational.

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previous chapter Supply and Demand
next chapter Bounded Rationality
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Metadata
Title
Rational Choice and Rational Expectations
Authors
Tshilidzi Marwala
Evan Hurwitz
Copyright Year
2017
Book
Artificial Intelligence and Economic Theory: Skynet in the Market

Print ISBN: 978-3-319-66103-2

Electronic ISBN: 978-3-319-66104-9

Copyright Year: 2017

DOI
https://doi.org/10.1007/978-3-319-66104-9_3

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