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Rational Choice Theory: Prudent and Logical Decisions

Rational choice theory is an economic principle that assumes individuals make logical decisions to maximize personal utility. It is used to model human decision-making, especially in microeconomics, where it helps economists understand society in terms of individual actions driven by rational choices. While it provides a simple and straightforward way to understand decisions, its weakness is that real life is complex and people do not always make rational choices by evaluating costs and benefits.

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4K views13 pages

Rational Choice Theory: Prudent and Logical Decisions

Rational choice theory is an economic principle that assumes individuals make logical decisions to maximize personal utility. It is used to model human decision-making, especially in microeconomics, where it helps economists understand society in terms of individual actions driven by rational choices. While it provides a simple and straightforward way to understand decisions, its weakness is that real life is complex and people do not always make rational choices by evaluating costs and benefits.

Uploaded by

Ruffa Mae Portugal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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RATIONAL CHOICE THEORY 

• is an economic principle that assumes that individuals


always make prudent and logical decisions that
provide them with the highest amount of personal
utility. ... Most mainstream academic assumptions
and theories are based on rational choice theory.
WHAT IS RATIONAL CHOICE THEORY IN
SOCIAL SCIENCE?
• Rational choice theory is one attempt to explain
how and why actors behave the way they
do. 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.
WHY IS RATIONAL CHOICE
THEORY IMPORTANT?
• 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.
ADAM SMITH-
• -who proposed the idea of an "invisible hand"
moving markets in the mid-1770's--usually gets
credit as the Father of Rational Choice
Theory, according to the Hartford Institute for
Religion Research.
WHAT IS THE RATIONAL CHOICE MODEL
OF DECISION MAKING?

• Assumptions of the Rational Decision-Making Model.


The rational model of decision making assumes that
people will make choices that maximize benefits and
minimize any costs.
• The idea of rational choice is easy to see in economic
theory.
• Classical or rational choice theory (RCT)
maintains that people are rational beings
who evaluate the consequences of their
decisions and move forward based on the
expected outcomes.
• In other words, when confronted with a
decision, we consider the costs and benefits
associated with each option.
• We then select the choice that will bring the
most benefit with the least amount of risk.
•From a criminological standpoint,
this means offenders choose crime
because the potential benefit of said
crime outweighs the risk.
STRENGTH OF RCT
It lies in its simplicity.
It is a clear
It is straight-forward theory that is not only
easy to understand, but allows us to evaluate
and consider others’ decisions.
WEAKNESS OF RCT

•Its weakness is that real life


isn't simple, clear, or straight
forward.
•More importantly, perhaps, is that
humans rarely are rational in the
sense of evaluating potential
consequences.
•We normally act on a whim and do not
think things through.
•Some people are better about it than others,
but in general, we all make decisions at
one point or another without considering
the risks and benefits of that choice.

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