Prologue – The Story of King Shahrayar and Shahrazad, His Vizier’s Daughter – Part I

The story begins with the king brothers, Shahrayar and Shahzaman, discovering the unfaithfulness and lewd behavior of their wives and concubines. Generalizing this to all women, Shahrayar decides to never remarry, instead instituting a custom of sleeping with a new woman every night and having her put to death the following day. From a psychological perspective, we might say this idea was insane. The king did predict, after hearing his brother’s misfortune, “I would have gone mad.” However, from an economic perspective, is this true? Was the king’s behavior irrational?

Economists define rational behavior in terms of analyzing costs and benefits. If an individual stands to benefit from a certain decision, then it’s in his own best interest to make that particular choice. The wisdom of the decision must be evaluated based on the amount and kind of knowledge the decision-maker had at his disposal.

Decisions are contextualized. A person’s worldview or belief in the validity of a particular source of information will influence the end result because it changes the way he or she evaluated expected costs and expected benefits. What we have in our story is a king deciding how to best live out the rest of his life within a belief system that says God has ordained women to cheat. Empirical evidence and a trusted authority (the demon’s wife) substantiate that belief. It’s in Shahzaman’s best interest to find a solution that allows him sexual gratification yet spares him the grief and embarrassment of an unfaithful wife.

What about the costs of such tyrannical behavior? The story doesn’t tell us the king’s expectations about the future. We might imagine that fewer marriages and births would take place as more and more women are taken to the palace. How would the king handle a demographic crisis that would weaken his kingdom? Parents might find it in their best interest to avoid the expense of raising a child and emotional attachment that will only result in pain over her death. Infanticide would skyrocket. Maybe the custom would incite the people to rebellion, or risk him being assassinated in the night.

Shahrayar might have considered these costs and valued the personal benefits more. Maybe he was too distraught to think clearly about the long-term consequences. We can only speculate, so we can’t make a firm conclusion about his economic rationality. However, it’s clear from the text that, after some considerable time, he saw no reason to change his course of action.

Conclusion: A rational decision maximizes the decision maker’s benefit, considering beliefs held and what knowledge was available at the time. Incomplete and imperfect knowledge about future costs will affect the decision maker’s ability to make certain choices. When new information becomes available after the choice is made, the decision maker may regret the action taken earlier, but that doesn’t mean it was irrational.