Rational Choice Theory
Encyclopaedia Britannica (reference below) defines rational choice theory as a “school of thought based on the assumption that individuals choose a course of action that is most in line with their personal preferences.”
It goes on to say:
“Rational choice theory is used to model human decision making, especially in the context of microeconomics, where it helps economists better understand the behaviour of a society in terms of individual actions as explained through rationality, in which choices are consistent because they are made according to personal preference. Rational choice theory increasingly is applied to other areas as well, including evolutionary theory, political science, and warfare.
“In rational choice theory, agents are described by their unchanging sets of preferences over all conceivable global outcomes. Agents are said to be rational if their preferences are complete – that is, if they reflect a relationship of superiority, inferiority, or indifference among all pairs of choices – and are logically ordered – that is, they do not exhibit any cyclic inconsistencies. In addition, for choices in which the probabilities of outcomes are either risky or uncertain, rational agents exhibit consistencies among their choices much as one would expect from an astute gambler.
“The consistency relations among preferences over outcomes are stated in mathematical axioms; a rational agent is one whose choices reflect internal consistency demanded by the axioms of rational choice. Rational choice theory holds that all considerations pertinent to choice (that may include attitudes toward risk, resentment, sympathy, envy, loyalty, love, and a sense of fairness) can be incorporated into agents’ preference rankings over all possible end states. Social scientists have only indirect access to agents’ desires through their revealed choices. Therefore, researchers infer back from observed behaviour to reconstruct the preference hierarchy that is thought to regulate a rational agent’s decisions.
“Rational choice theory is a fundamental element of game theory, which provides a mathematical framework for analyzing individuals’ mutually interdependent interactions. In this case, individuals are defined by their preferences over outcomes and the set of possible actions available to each.”
Encyclopaedia Britannica, Rational choice theory, at https://www.britannica.com/topic/rational-choice-theory, accessed 25 August 2018.
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Page created by: Ian Clark, last modified 25 August 2018.
Image: Contemplating Politics, at http://contemplatingpolitics.blogspot.com/2012/01/identity-expression-and-rational-choice.html#!/2012/01/identity-expression-and-rational-choice.html, accessed 25 August 2018.