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Researching politics - Essay Example

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As per as the definition of rational choice theory is concerned it is difficult to arrive at a particular definition. There are two important senses in which the theory is used. The first is in the informal…
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Download file to see previous pages At the same time there lies one problem with this definition of informal sense because all decisions made are deliberative and consistent in nature and therefore it becomes difficult to distinguish between the rational and the irrational. Taking cue from this we can say that everything comes under the definition of informal choice. (Grundmann et al, 2001, p. 106)
The second sense in which the professions use the rational choice theory is more formal in nature. This definition of the rational choice theory says that consumers have transitive choices and they try to maximize their utility from the set of preferences they have. The consumers in fact try to maximize their benefits from the choices in spite of the various constraints which they face while making their choices. Some of the economists find the formal sense of the theory so very obvious that they believe that it can have no limitation.  The critics of the formal definition of the theory on the other hand say that even the formal one is tautological in nature like the informal definition. They have tried to say that there is almost no behavior that does not seek to maximize the utility through their choices. The second criticism about the informal sense says that one can show some inconsistencies or puzzles in the notion of transitive preferences. (Grundmann et al, 2001, p. 106-107)
Researchers have said that the rational choice theory is very helpful in formulating hypothesis regarding market behavior. They have given five reasons as to why the rational choice theory is of much use. First of all it is seen that the theory allows the economists to make predictions about economic behavior and those predictions are mostly based on the empirical evidence. For instance the rational scenario predicts that the when the wage rate increases all the other factors remaining constant the supply of labor increases. (Grundmann et al, 2001, p. 107) Secondly the ...Download file to see next pagesRead More
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