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Strabo Glossary: Rational Choice Theory

Rational Choice Theory


Rational choice theory is an economic and social theory that seeks to explain human behaviour, decision-making, and interactions based on the assumption that individuals are rational actors who make choices to maximise their self-interest or utility. It is a fundamental concept in various fields, including economics, sociology, political science, and criminology.

Key Principles

Key principles of rational choice theory include:

  1. Rationality: Rational choice theory assumes that individuals are rational and act in a purposeful and goal-oriented manner. They have well-defined preferences and make choices that are expected to lead to outcomes that maximise their own interests or well-being.
  2. Utility Maximisation: The theory suggests that individuals seek to maximize their utility, which is a measure of satisfaction or happiness derived from various choices or outcomes. The goal is to choose options that provide the highest level of utility.
  3. Cost-Benefit Analysis: Rational actors make decisions by conducting a cost-benefit analysis, weighing the potential benefits of a choice against its associated costs. They choose options that offer the greatest net benefit.
  4. Constraints: Rational choice theory acknowledges that individuals' choices may be constrained by various factors, such as limited resources, time constraints, information asymmetry, or institutional rules and norms.
  5. Decision-Making Under Uncertainty: The theory recognises that individuals often make decisions in situations of uncertainty, where outcomes are uncertain or not fully known. In such cases, individuals may employ strategies like risk aversion or probabilistic decision-making to navigate uncertain situations.


Rational choice theory has been used to study a wide range of behaviours and social phenomena, including consumer choices, voting behavior, criminal behaviour, organisational decision-making, and more. It has been particularly influential in economics, where it serves as the foundation for many economic models and theories.

In Summary

Critics of rational choice theory argue that it oversimplifies human behaviour, ignoring emotional, social, and cultural factors that also influence decision-making. Additionally, some argue that people may not always act in a strictly rational manner, and other psychological factors, such as cognitive biases, can influence decision-making. As a result, rational choice theory is often used in combination with other theories and approaches to provide a more comprehensive understanding of human behaviour and decision-making.

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