True or False?
It is surely true that individuals exist who are irrational in the sense that they do not have internally-consistent preferences. Prime examples would be certain types of mental illness. For economic analysis (or, indeed, any kind of analysis of individual and social behavior) to make sense, a very large fraction of the population must have preferences that can be described by a coherent utility function. Such a model allows for the existence of drug addicts and alcoholics as well as people who consistently do stupid things. The critical issue is that their behaviour, however ridiculous, be internally consistent. It is also necessary that individuals preferences do not change during the period being analyzed. In general, while some individuals surely behave in an unstable fashion, it must be the case that the preferences of the great majority people change infrequently. Social science of any kind is impossible unless such conditions of consistency and stability hold.