Rational Choice Theory.What is rational in rational choice theory Essay

Rational Choice Theory.What is rational in rational choice theory - Essay Example The factors which derive the utility vary from individual to individual. Rational Choice theory is derived from the theoretical approach of Microeconomics. The rationalizing factor can also be called as the factor which can maximize the happiness or the satisfaction level which an individual derives after consumption. The study of this theory can also be used to determine the long term and the short term results that could be derived from the utilization or the consumption of the product (Archer and Tritter, 2000). This report will be structured to analyze the Rational Choice Theory. The complete theory will be analyzed and discussed relating to the impact of rationality on the choices which the consumers make. The theory and the concept of rationality will be critically analyzed to conclude the relevance and the application of the Rational Choice Theory. The Rational Choice Theory framework studies the societal and the economic factors of a society which determines the level of util ity which the individual determines. Both the factors mentioned are pivotal in determining the level of utility which the individuals derive. The word rationality and the postulates of the Rational Choice Theory differ from each other. Rationality is defined as the sane behavior of the individual to derive maximum utility from the product that is consumed. Rationality differs from Rational Choice Theory because the act of balancing the cost and the advantage that the consumer derives from the use of that product is counted as rational even if the decision made is inappropriate (Zafirovski, 2001). Rationality classifies the decision which is considered to be sane by the complete society but the Rational Choice Theory classifies the utility on the basis of satisfaction derived by the individuals irrespective whether the decision is right or wrong. This factor has been contradicted and debated by most. This report will highlight the importance of understanding the concept of the theory to reach to a conclusion. For this the theory will be critically assessed and commented (Zafirovski, 2001). RATIONAL CHOICE THEORY AND ITS EMPHASIS The emphasis of the Rational Choice Theory is to gain maximum understanding of the human behavior. The postulates that have been proposed in the theory are very vital for deriving the concepts of economics. The use of this theory is not limited only to economics but its application can be prominently admired in disciplines like sociology, political sciences etc. where human behavior plays a very vital role. By studying the behavior of the individuals the choices which they make and their preferences for particular products can be studied (Brinton and Nee, 2001). Assumptions of Rational Choice Theory To summarize the Rational Choice Theory it can be said that the individuals try their level best to make the best buying decisions which they can under the circumstances which they are facing. The assumptions for the application of the theor y are (Carling, 1991): 1. The human behavior and their action are destined for a purpose. The decision of the individual is to sight a goal that is to be achieved. 2. The decisions which the individuals make are prioritized. These set of priorities vary from individual to individual. 3. The decisions made by the individuals are on the basis of rationality. The level of preference of the products varies from individual to individual. This variation is subject to the factors like the utility derived from the consumption of the product, the cost variation of the alternates that are available, the option that is selected is considered to be the best way of maximizing the utility. 4. Social involvements of the individuals