Rational Choice Theory

What is the primary assumption of rational choice theory regarding human decision-making?

What is the second step in the rational choice model?

What is substantive rationality?

What is a limitation of rational choice theory?

What is a type of bias that can influence decision-making?

What is procedural rationality?

Rational choice theory assumes that individuals always make decisions that maximize their utility.

Rational choice theory is only applicable to economic decisions.

Rational choice theory assumes that individuals have complete knowledge of the potential outcomes of their decisions.

Rational choice theory assumes that individuals are capable of accurately weighing the costs and benefits of their decisions.

Rational choice theory is a descriptive theory that explains how individuals actually make decisions.

Definition

Rational choice theory is a framework for understanding human decision-making, assuming individuals make rational decisions based on their preferences, resources, and available options.

Key Assumptions

Complete information: Individuals have access to all relevant information about their options.
Rationality: Individuals make decisions that maximize their utility or satisfaction.
Consistency: Individuals' preferences are consistent and transitive (if A is preferred to B, and B is preferred to C, then A is preferred to C).

Rational Choice Model

Problem definition: Identify the decision to be made and the available options.
Option evaluation: Evaluate each option based on its expected utility or satisfaction.
Option selection: Choose the option with the highest expected utility.

Types of Rational Choice

Substantive rationality: Making decisions based on objective criteria, such as cost-benefit analysis.
Procedural rationality: Following a decision-making process that is rational, even if the outcome is not optimal.

Criticisms and Limitations

Bounded rationality: Humans do not always have complete information or the cognitive ability to process it.
Heuristics and biases: Individuals often use mental shortcuts and are prone to biases, leading to suboptimal decisions.
Contextual factors: Social, cultural, and environmental factors can influence decision-making.

Applications

Economics: Rational choice theory is used to model consumer behavior and market outcomes.
Political science: Understanding voting behavior and policy decision-making.
Sociology: Analyzing social phenomena, such as crime and deviance, through the lens of rational choice.

Test your understanding of rational choice theory, a framework for understanding human decision-making. Learn about key assumptions, types of rational choice, criticisms, and applications in economics, political science, and sociology.