Rational Choice Theory is used to understand the social and economic behaviors of the individuals. It is used in a number of academic subjects like Microeconomics, Political Science, Sociology and many more.
The application of the term rationality varies with the subject. Many other economic theories are concerned about the mechanism of the market that enables the production and distribution of goods. But the Rational Choice Theory is extensively used in applying the same principles that are used by other economic theories to understand interactions that include resources like prestige, time and many more.
According to the Rational Choice Theory, human beings are prompted by their own goals and preferences. Human actions are regulated primarily by the information regarding the conditions under which a particular individual is going to work and would try to achieve his or her goal. It is almost impossible for the human beings to get whatever they are desiring for. Choice of goals along with the selection of a proper method to reach the previously set target is very important in the domain of Rational Choice Theory.
According to the Rational Choice Theory, an individual should have a proper understanding of his or her own selection of goals and the consequences of that selection. Rational people always choose only those options that can offer good results.
According to the Rational Choice Theory, each and every kind of social contact or social interaction is treated as a method of social exchange. If the action is economic, the term ‘exchange’ is used to denote the exchange of certain goods and various services but if the exchange is social, interchange of behaviors and approvals takes place. Again, to keep the social and economic action parallel to each other, the Rational Choice Theory considers reward and punishment as benefit and cost respectively and the theory holds that the human action is dominated by their desires of getting good rewards.
Last Updated on : 1st July 2013
