Rational conflict

by Yanis Varoufakis

The study of economic rationality is attracting increasing attention from other disciplines as well as continuing to be the subject of debate within economics. At its heart is the notion that, in a situation of choice or confrontation, knowledge of an individual's desires and beliefs will allow their actions to be predicted. Yanis Varoufakis argues that this is an ideal abstraction which is both inapplicable and ineffective. Using examples from industrial relations, diplomacy, hostage crises and the law, he shows that it is impossible to quantify the aspirations of individuals in these conflicts, and that traditional theory ignores both the wider context and the history of similar cases.