Consequences for traditional decision making

Abstract

Traditional accounts of rational decision making cannot be applied in the field of macroeconomic policy-making because macroeconomic forecasts fail consistently. Having elaborated a minimalist notion of instrumental rationality, this chapter shows in particular that neither the deterministic nor the probabilistic account of rational choice can be applied. Furthermore, rational decision making cannot be based on causal knowledge, either. Eventually, macroeconomic policy-making is characterized as decision making under uncertainty and ignorance.