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Yes, they do make decisions, they take actions, but those actions do not necessarily fulfill any notion for consistent rationality.
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However, for any type space, if a strategy profile is consistent with rationality and common belief of rationality, then it must be a strategy that is in the set of strategies that survive iteratively removing strictly dominated strategies.
Much more interesting is the question whether the entire set of strategy profiles that survive iteratively removal of strictly dominated strategies is consistent with rationality and common belief in rationality.
Negative emotions distort people's logical rationality.
Another way to present it would be motivational rationality vs. logical rationality [ 59].
And if the explanation is time-varying risk premiums, it could all be consistent with rationality and market efficiency?
Housing bubbles — like the one precipitating the current mess — are all too consistent with full rationality on an individual level: if a bank anticipates that a borrower will refinance his mortgage loan should the price of his house rise, it may lend him money even though it knows he can't pay it back.
This intergenerational living pattern is not only in line with the filial piety requirements of Chinese culture, but also consistent with economic rationality.
Joe's consistent sureness, his "rationality and absence of 'craft or guile'", according to Thomas Schaub, seem to echo the Houyhnhnms, the race of rational horses in Jonathan Swift's Gulliver's Travels.
Rather, he showed that people depart from rationality in consistent ways, so their behavior can still be anticipated and modeled.
The fact that consumers not targeted by the FDA's 2001 mercury advisory (FDA 2001) reduced their fish consumption (even of fish lower in mercury) simply to rule out a food risk is consistent with the bounded rationality assumption.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com