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The rational choice model, also called rational choice theory refers to a set of guidelines that help understand economic and social behaviour. [1] The theory originated in the eighteenth century and can be traced back to the political economist and philosopher Adam Smith . [ 2 ]
Social choice theory is a branch of welfare economics that extends the theory of rational choice to collective decision-making. [1] Social choice studies the behavior of different mathematical procedures ( social welfare functions ) used to combine individual preferences into a coherent whole.
The mythological judgement of Paris required selecting from three incomparable alternatives (the goddesses shown).. Decision theory or the theory of rational choice is a branch of probability, economics, and analytic philosophy that uses the tools of expected utility and probability to model how individuals would behave rationally under uncertainty.
March and Olsen distinguish the logic of appropriateness from what they term the "logic of consequences," more commonly known as rational choice theory.The logic of consequences is based on the assumption that actors have fixed preferences, will make cost-benefit calculations, and choose among different options by evaluating the likely consequences for their objectives.
He believed his Exchange Theory was derived from both behavioral psychology and elementary economics. [22] Elementary economics, also known as 'rational choice theory,' was set to explain how economics and human social behavior were tied together.
Arrow's impossibility theorem is a key result in social choice theory, showing that no ranking-based decision rule can satisfy the requirements of rational choice theory. [1]
Elster wrote numerous books attempting to use rational choice theory for a wide variety of social explanations. "Rational choice theory is far more than a technical tool for explaining behaviour," he once wrote. "It is also, and very importantly, a way of coming to grips with ourselves - not only what we should do, but even what we should be."
Kenneth Arrow's monograph Social Choice and Individual Values (1951, 2nd ed., 1963, 3rd ed., 2012) and a theorem within it created modern social choice theory, a rigorous melding of social ethics and voting theory with an economic flavor.