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Random Expected Utility,
Random Expected Utility,

... that results from random utility maximization has been a central concern of the random ...
Lec 8
Lec 8

... Marginal Utility and the Elasticity of Demand If, as the quantity consumed of a good increases, marginal utility decreases quickly, the demand for the good is inelastic. The reason is that for a given change in the price, only a small change in the quantity consumed of the good is needed to bring i ...
utility
utility

... • Behavioral Economics ‒ Behavioral economics studies the ways in which limits on the human brain’s ability to compute and implement rational decisions influence economic behavior—both the decisions that people make and the consequences of those decisions for the way markets work. ‒ There are three ...
Chapter 19
Chapter 19

Choice, Change, Challenge, and Opportunity
Choice, Change, Challenge, and Opportunity

... Predictions of Marginal Utility Theory A Rise in the Price of Soda Now suppose the price of soda rises. We know that MUS/PS falls, so before the consumer changes the quantities consumed, MUS/PS < MUM/PM. To restore consumer equilibrium (maximum total utility) the consumer decreases the quantity of ...
Hedonic adaptation and the role of decision and experience utility in
Hedonic adaptation and the role of decision and experience utility in

... preference- or choice-based conceptions of utility cannot be used to judge the optimality of behavior because they assume it — they assume that whatever people do maximizes their welfare. However, if we equate welfare with experience utility, thereby distinguishing it from choice-based or, “decision ...
Chapter 8
Chapter 8

... to use the idea of choices made at the margin. Choosing at the Margin Having made a choice, would spending a dollar more or a dollar less on a good bring more total utililty? ...
Choice, Change, Challenge, and Opportunity
Choice, Change, Challenge, and Opportunity

MU M - WordPress.com
MU M - WordPress.com

... Predictions of Marginal Utility Theory A Rise in the Price of Soda Now suppose the price of soda rises. We know that MUS/PS falls, so before the consumer changes the quantities consumed, MUS/PS < MUM/PM. To restore consumer equilibrium (maximum total utility) the consumer decreases the quantity of ...
Preference for Flexibility and Random Choice - IAE-CSIC
Preference for Flexibility and Random Choice - IAE-CSIC

Choice, Change, Challenge, and Opportunity
Choice, Change, Challenge, and Opportunity

Choice, Change, Challenge, and Opportunity
Choice, Change, Challenge, and Opportunity

... Behavioral Economics Behavioral economics studies the ways in which limits on the human brain’s ability to compute and implement rational decisions influences economic behavior—both the decisions that people make and the consequences of those decisions for the way markets work. There are three imped ...
Choice, Change, Challenge, and Opportunity
Choice, Change, Challenge, and Opportunity

... Predictions of Marginal Utility Theory A Rise in the Price of Soda Now suppose the price of soda rises. We know that MUS/PS falls, so before the consumer changes the quantities consumed, MUS/PS < MUM/PM. To restore consumer equilibrium (maximum total utility) the consumer decreases the quantity of ...
12.2 Utility Functions and Probabilities
12.2 Utility Functions and Probabilities

... in the other state of nature-how much wealth you will have if the house is not destroyed. For the house will either burn down or it won't. If it happens to burn down, then the value of extra wealth shouldn't depend on how much wealth you would have if it didn't burn down. Bygones are bygones--so wha ...
Chapter 6: Household Behavior and Consumer Choice
Chapter 6: Household Behavior and Consumer Choice

Homo Economicus Goes to War - UCLA Division of Social Sciences
Homo Economicus Goes to War - UCLA Division of Social Sciences

... paper reviews the intellectual foundations and empirical substance of such theories and offers a critique drawing on a political economy perspective. There are strong grounds for arguing that orthodox economic theories of war are reductionist, speculative, and misleading. Theories that are driven by ...
Preference for Flexibility and Random Choice
Preference for Flexibility and Random Choice

THE CONCEPTUALIZATION OF `TRUST` IN ECONOMIC THOUGHT
THE CONCEPTUALIZATION OF `TRUST` IN ECONOMIC THOUGHT

... the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public or in some contrivance to raise prices’ (Smith 1776: 232). In short, neoclassical economists have 'tied their own hands' when it comes to analysing the system of social ...
Principles of Economics, Case and Fair,9e
Principles of Economics, Case and Fair,9e

PDF
PDF

... pervasive, and many economists thought that they had to take a stand on value neutrality. Sen's (1970) memorable text on collective choice might be one of the latest references dealing with the problem of what it means for economists to make value judgments and to be neutral as between values. Outmo ...
The shape of incomplete preferences
The shape of incomplete preferences

... Incomplete preferences are generally represented by imprecise (set-valued) probabilities and/or utilities. Varying degrees and types of imprecision have been modeled previously in the literature of statistical decision theory and rational choice: 1. If probabilities alone are considered to be imprec ...
Approximate Aggregation under Uncertainty
Approximate Aggregation under Uncertainty

Preferences and Utility. X : set of alternatives (choice set or domain
Preferences and Utility. X : set of alternatives (choice set or domain

util - Pearson
util - Pearson

... We can use the utility-maximizing rule to determine whether consumers are doing the best they can. Suppose a firm has a fixed budget of $200 to spend on punch and cookies for its holiday party. • The price of punch is $2 per cup and the price of cookies is $1 per cookie; both goods will, of course, ...
Principles of Economics, Case and Fair,9e
Principles of Economics, Case and Fair,9e

... Price changes affect households in two ways. First, if we assume that households confine their choices to products that improve their well-being, then a decline in the price of any product, ceteris paribus, will make the household unequivocally better off. ...
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Rational choice theory



Rational choice theory, also known as choice theory or rational action theory, is a framework for understanding and often formally modeling social and economic behavior. The basic premise of rational choice theory is that aggregate social behavior results from the behavior of individual actors, each of whom is making their individual decisions. The theory therefore focuses on the determinants of the individual choices (methodological individualism).Rational choice theory then assumes that an individual has preferences among the available choice alternatives that allow them to state which option they prefer. These preferences are assumed to be complete (the person can always say which of two alternatives they consider preferable or that neither is preferred to the other) and transitive (if option A is preferred over option B and option B is preferred over option C, then A is preferred over C). The rational agent is assumed to take account of available information, probabilities of events, and potential costs and benefits in determining preferences, and to act consistently in choosing the self-determined best choice of action.Rationality is widely used as an assumption of the behavior of individuals in microeconomic models and analyses and appears in almost all economics textbook treatments of human decision-making. It is also central to some of modern political science, sociology, and philosophy. A particular version of rationality is instrumental rationality, which involves seeking the most cost-effective means to achieve a specific goal without reflecting on the worthiness of that goal. Gary Becker was an early proponent of applying rational actor models more widely. Becker won the 1992 Nobel Memorial Prize in Economic Sciences for his studies of discrimination, crime, and human capital.
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