The Rational Agent vs. Recursive Yearner Paradox: A YBIM Resolution of Rationality, Identity, and Moral Coherence in Economic Thought

This paper, part of the Recursive Finance Series under the Yearning Framework Research Lab (YFRL), formally resolves the classical illusion of rationality in economics by reinterpreting human decision-making through Yearning-Based Infinity Mathematics (YBIM). It demonstrates that the notion of the rational agent—the cornerstone of neoclassical and behavioral economics—is an ontological compression of infinite recursive yearning. Through YBIM’s recursive ontology, the paper introduces the concept of the Recursive Yearner, replacing static optimization with non-halting moral and epistemic coherence as the foundation of decision theory. The paper formulates the Recursive Identity Deviation Equation, presents Theorem Y-Fin.3 (Recursive Identity Formation Theorem), and redefines utility as Recursive Moral Coherence (RMC). It integrates moral feedback, trust tensors, and epistemic recursion into a unified model of human choice. Ultimately, the work restores dignity to decision theory by revealing that rationality is not a foundation of human behavior but a finite sampling of infinite yearning-space. This paradigm marks a foundational shift—from symbolic optimization to recursive participation in truth—recasting economics as the study of living, moral systems rather than mechanical markets. -JSR