The illusion of rational man; enter the economics of fear

May 12, 2009 (LBO) - The Greek historian Plutarch has recorded an encounter which Alexander the Great had with one of the sages of Taxila University, Dandamis, in the third century B.C. The youthful emperor, having been impressed by Dandamis’ skilful resolution of numerous riddles thrown at him, had asked one final question: 'how can one make oneself loved and respected?'

Dandamis had a straight answer to this question: 'if one has immense powers, but does not inflict fear in others, then, one is loved and respected'.

This answer paraphrases one of the fundamental tenets of the behaviour of species: ˜The fear is painful and reduces pleasure. The removal of fear adds to happiness and is desired by everybody’.

Disutility

Economists have termed the pleasure which a person gets out of a desirable experience as ˜utility’. In the opposite, the pain out of an undesirable experience has been called ˜disutility’.

A person’s action, if he is rational or, in other words, not influenced by emotions, prejudices or biases, is always guided by his desire to avoid disutility and seek for utility.

Since fear brings disutility to a person, he would