I'm a physicist working on a mathematical model of a financial market. In the model I'm elaborating, agency rationality is neither mentioned nor used. All the analysis is based on physical/behavioral quantities. The main argument is that this model is closer to the heuristics of physics for it works with objects (the material acts) rather than with subjects (the "preference orderings" of agents). It is therefore not compatible with the orthodox interpretation of economics, which presupposes rational utility-maximizing agents as being the fundamental components of the system (a different approach, not necessarily a better one). What I need to know is whether the hypothesis of rationality in the neoclassical sense (an ahistoric, asocial definition) is compatible with the "exact" sciences. Is this idea of rationality falsifiable within the methodology of Economics? Is this definition a sound foundation to build a "science of complexity"? Any references would be of great help.
The Answer
The question of whether/how/in what sense the notion of rationality employed in microeconomics (and "rational choice" theory as it is called when applied elsewhere) is scientifically problematic is THE question in the field of economic methodology (and has been since the middle of the 19th century). There is also a literature that links the so-called rationality assumption with the literature on moral philosophy (as well as epistemology and philosophy of science) since it seems to smuggle in a certain normative component into supposedly descriptive economic science. The literature on these questions is enormous and I hardly no where to start (but let me try).
The philosopher who has written most directly on this issue is Alexander Rosenberg. He has many papers and books, but probably the best single source of his arguments is "Economics - Mathematical Politics or Science of Diminishing Returns" Chicago, 1992. It is a bad title, but a good book and a clear statement of his arguments against economics in general and the rationality assumption in particular.
On the ethics/moral philosophy side, Hausman & McPherson ("Economic Analysis and Moral Philosophy" CUP 1996) is probably the best source. The book is an advanced undergraduate textbook on economics and moral philosophy, but it does a very good job laying out the relevant questions and you can follow the references if you want to look at the more technical literature.
From a more historical perspective - particularly the question of how
economics does or does not mirror physics - I would recommend Philip Mirowski's work ("More Heat Than Light: Economics as Social Physics: Physics as Nature's Economics" CUP 1989 and "Machine Dreams: Economics Becomes a Cyborg Science" CUP 2002). Both of these books are extremely influential (if controversial) works on the history of modern economics.
Finally for a general discussion of the literature on "economic methodology" (the relationship between economics and philosophy of science, etc.) I would have to suggest my own book ("Reflection Without Rules: Economic Methodology and Contemporary Science Theory" CUP 2003). It is survey, but there are a number of places where the cognitive status of the rationality principle is addressed. There are detailed references and you can follow-up on the specific issues that interest you.
Well, this is a start. I hope this helps. By the way, if you think of any new answers to any of these questions, I (and others) would be interested.
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