Rational Choice Theory

Topics: Rational choice theory, Economics, Mortgage loan Pages: 2 (686 words) Published: September 17, 2013
Essay Title: Write an original essay of no more than 600 words that explains, as clearly, logically, and concisely as possible, why you find a specific theory significant. Briefly summarize the theory, which can come from any field of study such as history, science, literature, engineering, philosophy, art, culture, or politics. Then analyze the way in which the theory has enabled you to understand some phenomenon more intelligently. We are looking for evidence of your analytical ability and intellectual originality.

A Significant theory to me will be the Rational Choice theory. This theory explains how people make decisions by seeking the most cost-effective means to achieve a specific goal without reflecting on the worthiness of that goal; to maximize personal advantage by weighing costs against benefits without moral or ethical values. It is a popular theory as it is an efficient system that explains and predicts a behavior of a person, and to larger extent, a collective group of people. Understanding this theory would allow a person to understand quickly how decisions are made, and the impact of the decisions on a society — how it functions and performs economically. Based on this theory, people’s measured decisions are often calculated based on financial benefits and costs. Singapore, by and large, has functioned on this theory, which has benefited from this tool of measurement and prospered since the days of nation building. However, this theory will work perfectly only if everyone in the society shares the same values, had perfect information, and the ability to make the most rational decisions at any point in time. People living in a society with homogenous values, such as Singapore, have similar behavioural patterns, which enable this theory to work. However, on a global scale, this theory will no longer work as peoples’ values are varied and culturally diverse. The most rational choice for one man might be an irrational choice for...
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