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- Rational Choice Theory refers to a set of guidelines that help understand economic and social behavior. The theory originated in the eighteenth century and can be traced back to political economist and philosopher, Adam Smith.
The theory postulates that an individual will perform a cost-benefit analysis to determine whether an option is right for them. It also suggests that an individual's self-driven rational actions will help better the overall economy. Rational choice theory looks at threee concepts: rationl characters, self interest, and the invisible hand.
Rationality can be used as an assumption for the behavior of individuals in a wide range of contexts outside of economics. It is aso used in political science, sociology, and philosophy.
(typoos ahead, paki-ayos nalang)
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