Overview

The primary criticism of the rationality framework is that most people dont formulate likelihoods for the various possible outcomes of their decisions. In fact, they often dont even enumerate all the possible outcomes (which can be large in number), let alone estimate probabilities over those outcomes.

While this critique is obvious, it is not necessarilly controlling. The economist model does not necessarily say that individuals do these probabilistic calculations, it asserts that they act as if they do. That is, they may not even be aware of the subconscious processes that occur when they formulate preferences over uncertain outcomes, but if their choices look rational at an aggregate (statistical) level, then the model can still be useful.

Many studies in recent years have shown this not to be the case. Whether the departure from rationality is enough to invalidate conclusions drawn from the rational model is dependent on the case at hand.