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Conventions, Rationality, and Social Interaction

Rouslan Koumakhov (2025)

In Rainer Diaz-Bone & Guillemette de Larquier (eds.), Handbook of economics and sociology of conventions. Cham: Springer, Online first

Abstract. The concept of rationality is a central concern for social sciences in general and for economics in particular. The chapter focuses on the role that rationality plays in the work of Olivier Favereau, cofounder of economics and sociology of conventions (in short, EC/SC or convention theory). One of the major pillars of Favereau’s account of conventions is the assumption of bounded rationality, a notion suggested and elaborated into a theory by the Nobel Prize-winning polymath Herbert Simon. The chapter discusses how the acceptance of bounded rationality distinguishes convention theory from dominant neoclassical economic theories. In Favereau’s account, rationality is inherently intertwined with various issues of social interaction, including coordination problems within collective entities. The chapter describes various connections between rationality, behavioral rules, and formal organizations. Such connections relate to key concepts of EC/SC, especially the notion of common worlds or quality conventions. The chapter emphasizes the links between Simon’s theory of bounded rationality and the emphasis on reflexivity and normativity in convention theory. It examines critiques of the assumption of bounded rationality as foundational to convention theory and discusses the related evolution of the role of rationality in the EC/SC program.

Fig. 1 Taxonomy of economic theories. (Based on Favereau 1989a, b, 2010, 2020)

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