Title External Norms and Rationality of Choice

Ever since Sen (1993) criticized the notion of internal consistency of choice, there exists a widespread perception that the standard rationalizability approach to the theory of choice has difficulties in coping with the existence of external norms. We introduce a concept of norm-conditional rationalizability and show that external norms can be made compatible with the methods underlying the rationalizability approach. This claim is substantiated by characterizing norm-conditional rationalizability by means of suitably modified revealed preference axioms in the theory of rational choice on general domains due to Richter (1966; 1971) and Hansson (1968). Journal of Economic Literature Classification Nos.: D11, D71. ∗ Thanks are due to Nick Baigent, Wulf Gaertner, Prasanta Pattanaik, Amartya Sen and Yongsheng Xu for discussions over the years on this and related issues. We are grateful to Bhaskar Dutta, Prasanta Pattanaik, Donald Saari, Thomas Schwartz as well as an editor and two referees of this Journal for their helpful comments. Financial support through grants from the Social Sciences and Humanities Research Council of Canada and a Grant-in-Aid for Scientific Research from the Ministry of Education, Culture, Sports, Science and Technology of Japan is gratefully acknowledged.