So our job seekers’ goal might be to obtain sufficient money to pay off a debt.If he believes that he can get a job which will achieve this goal and this belief is rational based upon the information which he has collected, then it would be a rational choice of action to get a job, rather than say sell a valuable treasured possession to get the money.The second is the set of rational beliefs about the causal structure of the situation, this determines what courses of action will lead to what outcomes.
This would involve visiting the local job centre and looking in that vacancies section of the newspapers to ascertain the kind of employment that is currently available.
It is not the case that the more information that an individual gathers, the better of they will be because there are costs associated with the gathering of information.
While the rationality of an action is ensured by its standing in the right kind of relation to the goals and beliefs of the agent, the rationality of beliefs depends on their having the right kind of relation to the evidence available to him.
This is a normative theory which can then be employed in an explanatory function.
One choice may yield immediate gains, the alternative a larger but delayed benefit.
Therefore to choose between the two, the rational agent must have a justified method of comparing the benefits of alternatives that have different temporal patterns.Exponential time preference means that the present value of the future decays at a constant rate as the future develops; conversely non-exponential time preferences imply that some parts of the future lose their value more rapidly than others.The time element is particularly important in strategic situations, as it may alter what is considered to be rational.This concern with outcome is same as Weber’s concept of ‘zweckrational’ action, where an individual performs the action which is most likely to further the individual’s pursuit of a particular goal. To illustrate this point I shall use the example of an individual looking for a job.Firstly the individual must collect an optimal amount of information before taking the decision.It is possible to identify 3 distinct elements in the choice situation.The first is the feasible set or the set of all courses of action available.Depending on the consistency of the time preferences, they can either be rational or irrational.Strotz showed that time preferences that are inconsistent are irrational, and that inconsistency is the result of non-exponential time preferences.Similarly the belief that he stands a good chance of getting a job for which he is not qualified according to the information that he has collected is not rational.Finally the individual should choose the best means of obtaining his goal, given the beliefs that individual holds.