Schumpeter and Knight on economic and political rationality: a comparative restatement

Joseph Schumpeter's and Frank Knight's theories on political and economic decision-making are analyzed to show a difference in the theorists' perceptions on rationality. The comparative analysis indicated that individual rationality is affected by institutional changes and that the perception development process has significant bearing on decisions. These suggest that information processing and decision-making are not independent of other factors. The theories should be a major part of future studies on individual decisions to effect positive economic and political changes.