In this synopsis I intend to analyse the rational natural selection model and its relevance in economic theory, using the emolument theory as an example. Firstly I will go down and explain rational quality and then introduce inferior theory. From there I will move on to outlining about of the major criticisms of the rational prize model.
Rational choice is a mental model directed at testing and analysing the rationality of singulars decisions. It was introduced to economic science by John Mill, who adapted Benthams pleasure-pain principle.
For an individual to behave rationally, he would have to attempt to obtain the greatest possible rapture from the specie resources he has available when making a purchase . Rational choice is therefore not a goal precisely a mean to reach goals . When deciding which action to take, an economic agent simply has to consider the expected benefit from this action. H. A. Simon argued that the rational man of economics is a maximiser who will settle for nothing less but the best .
The best way to show rational choice is by using an example. Assume agent A has a choice of both CDs, X and Y, but can only taint one of them, due to restricted monetary resources. As he prefers Y over X, he will therefore spoil Y.
This example shows that rational choice is about maximising satisfaction from actions taken.
Rationality as an attempt to maximise satisfaction has close ties with profit theory.
Utility is defined as the satisfaction or pleasure that an individual derives from the consumption of a good or service . It is often argued that individuals are utility maximisers, meaning that they are trying to maximise their utility from a fixed limited income. In a two good world, the point of utility maximisation can be described as:...
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