Robert Paul Wolff has a humorous post about rational choice theory that you economically-minded readers are likely to enjoy.
Praxeology as a crude look at human action is interesting and possibly useful. Placing the axioms of praxeology way above all scientific and common sense notions of human nature is not.
We do not have a one-dimensional utility function. We have many utility functions, contextually dependent, fuzzy, and with a possible random impulse generator to keep our systems from hanging.
If you think of each utility function as "voting", you can get a situation similar to Condorcet voting: non-transitive preferences. This helps explain common human behaviors such as indecision.
Bechara on the subject:
Most theories of choice assume that decisions derive from an assessment of the future outcomes of various options and alternatives through some type of cost-benefit analyses. The influence of emotions on decision-making is largely ignored. The studies of decision-making in neurological patients who can no longer process emotional information normally suggest that people make judgments not only by evaluating the consequences and their probability of occurring, but also and even sometimes primarily at a gut or emotional level.
...holy Bryan Caplan, Batman!
Most theories of choice assume that decisions derive from an assessment of the future outcomes of various options and alternatives through some type of cost-benefit analyses.
Then most theories of choice are needlessly stupid. A theory of choice which assumes that a decision is optimal (really or approximately, infallibly or fallibly) need not assume that its optimality is derived through an active mental process of assessing future outcomes. For example, it is optimal for spiders to spin webs so that they will catch prey, but this does not mean that spiders sit down and actually reason things through before spinning a web. They spin webs by unthinking instinct and doing so is optimal. There is, of course, a process of assessment of future outcomes indeed occurring in the background. This is natural selection itself.
A theory of choice can therefore usefully treat decision as if they had derived from an assessment of future outcomes, whether or not they had actually done so. For a critic to come along and point out, as if it were a criticism, that people don't actually assess future outcomes, is then simply a case of the critic being unclear on the concept of "as if".
people make judgments not only by evaluating the consequences and their probability of occurring, but also and even sometimes primarily at a gut or emotional level.
Which fact does not constitute a criticism of a theory of choice which treats judgments as if they were a product of the evaluation of consequences. See above discussion.
It's not revealed preference, but just talk. Talk is cheap. It may be impossible to reveal an inconsistent preference. You can change your preferences at any time so in order to reveal your preference at any given moment you need to be presented with all relevant options at that moment and make your choice. If you are presented with three mutually exclusive options, A, B, or C, then you by definition you can choose at most one of them. Suppose you choose B. Then what you have revealed is that you prefer B to A and you prefer B to C. You've proven that it is not the case either that A>B>C>A or C>B>A>C. Therefore you have revealed that your preference is transitive.
If you choose none of the above, then you have not revealed anything about your prefence between them.
Well, as there are a number of NCAA Football fans around these parts, I'd point out that the transitive property is one that must deal with some level of objective fact... And as many of us say, "there's no transitive property in college football."
As an example.
My beloved Purdue Boilermakers beat Ohio State.
Ohio State beat the Wisconsin Badgers.
Therefore, Purdue should beat Wisconsin.
But that's not what happened; Wisconsin pummeled us 37 to nothing.
Or, if you try to consider this as "revealed preference," as mentioned above.
Preseason, many thought USC was better than Ohio State. The on-field results would tend to back up that statement, with USC beating Ohio State. But later, USC lost 4 games while Ohio State only lost 2. Can you still state that USC is "better" than OSU?
Preseason, Purdue was expected to be FAR worse than Ohio State. But this was apparently contradicted on the field when Purdue beat OSU. Does that mean that 7-loss Purdue (playing in a similar conference amassing a worse record against similar opponents) is better than Ohio State? Obviously not.
Or, since Purdue beat OSU by 8 points and USC only beat them by 3 points, and Purdue lost to Oregon by 2 points while USC lost to Oregon by 27, is Purdue better than USC? I'd sadly say that no, I don't think Purdue is better than USC.
As a mathematical concept dealing with objective facts, the transitive property makes sense. If 5 > 3, and 3 > 1, therefore 5 > 1. If Bob is larger that Steve, and Steve is larger than Mary, therefor Bob is larger than Mary. But in fields where there is significant variance (such as football) or there are different first principles (such as WHY you might hate certain politicians more or less), the transitive property breaks down.
He is apparently a Marxist when it comes to economics, so no surprise that he admits to insanity!