Rational+Behavior

Rational behavior is one of the assumptions on which economics is premised. This assumes that individual actors will follow the course of action they believe will bring them the greatest satisfaction. It is important to note the difference between rational self-interest and what is commonly termed selfishness. People may act altruistically simply because it makes them feel happy, a fact which allows for such mainstays of our human society as charity and welfare. Rational bahavior will differ among different individuals in different situations, because different people will be aiming for different types of satisfaction. Implicated in any examination of rational self-interest is a simple method of cost-benefit analysis. If the marginal costs of taking an action outweigh the marginal benefits (at least in the mind of the actor), the economist assumes that that action will not be taken. Thus a person who vastly prefers Pepsi to Sprite when the two products are comparably priced may still buy the Sprite when it is priced far lower than the alternative soda product. In summary, individuals attempt to look after their own well-being, cultivate the self, and protect the good of the self.

Sample problem: If Jones prefers oranges to apples when they are the same price, but apples go on sale and oranges are out of season, which product will he buy? (assume that apples cost $0.54 per pound, and oranges cost $6.72 and apples are worth $1.23 of happiness and oranges are worth $3.21 of happiness to Jones).

Sample answer: he will obviously buy the apples, because his rational self-interest dictates that he follows that action which will bring him the greatest marginal net benefit. . media type="youtube" key="UTZ78TPNx_o&hl=en&fs=1" height="344" width="425" In the Christmas Carol Scrooge realizes the things that he really wants.

To learn more visit one of these websites: [|examination of rational self-interest in big corporations] [|self interest redefined] [|controversal article]