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Group 5 - Rational Choice Theory

The document outlines Rational Choice Theory. It discusses how the theory views individuals as making rational decisions based on their self-interest to maximize personal welfare. Rational Choice Theory is used to explain economic behavior and predict outcomes based on evaluating costs and benefits of choices. It also examines how the theory can be applied to understanding decision-making and power dynamics within society, states, and other organizations.

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ALEX CRUZ
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117 views5 pages

Group 5 - Rational Choice Theory

The document outlines Rational Choice Theory. It discusses how the theory views individuals as making rational decisions based on their self-interest to maximize personal welfare. Rational Choice Theory is used to explain economic behavior and predict outcomes based on evaluating costs and benefits of choices. It also examines how the theory can be applied to understanding decision-making and power dynamics within society, states, and other organizations.

Uploaded by

ALEX CRUZ
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Rational Choice Theory Outline Report

I. OBJECTIVES

At the end of the discussion, students are expected to:

1) Comprehend the main idea of the theory.

2) Identify the perspective and interconnectedness of the theory on economy,


society, state, power, and the process on how it is being distributed.

3) Learn the essence and function of the theory on the real-world situations.

II. THE SUBJECT

Topic: Rational Choice Theory

Materials: PowerPoint Presentation

References:

Corp-Msw1 Omswp (2022). "Introduction to Rational Choice Theory in Social Work"


Retrieved March 1, 2023, from https://www.onlinemswprograms.com/social-
work/theories/rational-choice-theory/

Ganti, Akhilesh. May (2022). “Rational Choice Theory.”  Investopedia.


investopedia.com/terms/r/rational-choice-theory.asp.

Grimsley, Shawn. (n,d). “Rational Choice Theory: Definition & Principles.” Study.com.
https://study.com/academy/lesson/rational-choice-theory-definition-
principles.html

Wittek, Rafael. January (2013). “Rational Choice Theory.” ResearchGate.


www.researchgate.net/publication/281206368_Rational_Choice

III. PROCEDURES

A) INTRODUCTION
Brief details of the theory and its background.

B) MOTIVATION

Introduce the game “This or That” in the class. The reporter would ask two
interrelated circumstances or objects and let the class to choose between the given
options. This would test the preferences and logical decision-making process of every
individual.

C) DISCUSSION

1) Explain the connection of the game on the topic provided. Thus, discuss the
idea of the Rational Choice Theory and its relation in the economy/market.

2) Discuss how Rational Choice Theory viewed society and state.

3) Discuss the perspective of Rational Choice Theory in terms of power and how
it is

4) Conclude and elaborate other information about the Rational Choice Theory.

Prepared by:

Ibanez, Eunice

Medina, Ma. Katrina

Palpal-latoc, Maila

Robete, Riza

Rodavia, Jewel Kaye

Tubiera, Patricia Alyanan

Videz, Crystal Pearl


TOPIC OUTLINE: Rational Choice Theory

The idea of the Rational Choice Theory and its relation in the economy/market.

 Rational Choice Theory- an individual makes choices that will provide them with
greatest benefit.
 Adam Smith- created the foundation of this theory through the concept "invisible
hand". An individual acts based on their own interest in a way that it maximizes
their welfare.
 It is used to predict how and why people behave in a certain manner, predicts
voting patterns, and explains the behavior of politician.

Rational Choice Theory in Economics

 Rational choice theory looks at the utility or overall benefit and satisfaction
gained by a particular purchase. It is used in economics to predict particular
outcome and behavior.
 An individual considers monetary gain and losses in decision-making.
 It is used as a guideline to assume how consumers would behave based on their
own preferences.

Rational Choice Theory in State

 States, intergovernmental organizations, nongovernmental organizations, and


multinational corporations are all made up of human beings. In order to
understand the actions of these entities, we must understand the behavior of the
humans running them.
 Rational choice theory is a theory in social science that argues human behavior,
and social life in general, can be explained in terms of rational choices of
individuals.
 Rational choice theory is an umbrella term for a variety of models explaining
social phenomena as outcomes of individual action that can in some way be
construed as rational. “Rational behavior” is behavior that is suitable for the
realization of specific goals, given the limitations imposed by the situation.
 All theories attempt to give meaning to the things we observe in the world.
Rational choice theory can explain why people, groups, and society as a whole
make certain choices, based on specific costs and rewards.

Rational Choice Theory in Society

Key elements of all rational choice explanations:

1. Preferences - denote the positive or negative evaluations individuals attach to the


possible outcomes of their actions. Preferences can have many roots, ranging from
culturally transmitted tastes for food or other items to personal habits and
commitments.

2. Beliefs - refer to perceived cause-effect relations, including the perceived likelihood


with which an individual’s actions will result in different possible outcomes.

3. Constraints - define the limits to the set of feasible actions (e.g., the amount of
credit one can get imposes a budget constraint on those considering buying a house).

Rational Choice Theory in Power and How it is being Distributed

 Power is an attribute that is conferred upon individuals as a result of their


rational choices. Power is defined as the ability to influence events by altering
the behavior of others in your favor.
 The theory states that people are naturally inclined towards self-interest, and
therefore will always make decisions that favor them in some way or another.
Those who have more power than others often use this advantage to further
their interests at the expense of those who do not possess similar amounts of
power.
 Power is a resource that is used by individuals to obtain rewards from others,
e.g., money, prestige, social status, and so on.
 People are motivated to acquire power because they want to obtain rewards.
 The acquisition of power is an important step towards obtaining these rewards
Therefore, people should seek power to achieve their goals and aspirations (e.g.,
career advancement).

Individuals are in control of their decisions, according to rational choice theory. They
do not base their decisions on unconscious motivations, tradition, or external factors.
Instead, they analyze the consequences and potential advantages using rational
considerations.

In General, Rational Choice Theory simply focused on the maximizing individual’s


self-interest and concept of rational actors. This theory states that “individuals use their
self-interests to make choices that will provide them with the greatest benefit”. In
economics, rational choice theory was a school of thought stating people’s decisions
that are based on rational analysis to achieve favorable outcomes.

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