제목

Rational Choice theory

서강대학교 교수학습센터
Nov. 09, 2015
부소장 정유성
Prof. Dr. Kyu Young
LEE

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 Rational choice theory – understanding (1)

Rational choice theory, also known as rational action theory,

- a framework for understanding and often formally modeling social and economic
behavior.
- the dominant theoretical paradigm in microeconomics.
- also central to modern political science and is used by scholars in other disciplines
such as sociology

The 'rationality' in rational choice theory - different from the colloquial and most
philosophical uses of rationality.
Although models of rational choice are diverse, all assume individuals choose the best
action according to stable preference functions and constraints facing them. Most
models have additional assumptions.

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Rational choice theory – understanding (2)

Proponents of rational choice models

- do not claim that a model's assumptions are a full description of reality, only
that good models can aid reasoning and provide help in formulating falsifiable
hypotheses, whether intuitive or not. Successful hypotheses are those that survive
empirical tests.

Rational choice theory is

- a successor of much older descriptions of rational behavior.
- widely used as an assumption of the behavior of individuals in microeconomic
models and analysis.
Although rationality cannot be directly empirically tested, empirical tests can be
conducted on some of the results derived from the models.

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 Rational choice theory in social science

Over the last decades rational choice theory has also become increasingly employe
d in social sciences other than economics, such as sociology and political science.
It has had far-reaching impacts on the study of political science, especially in fields
like the study of interest groups, elections, behaviour in legislatures, coalitions, and
bureaucracy.
Models that rely on rational choice theory often adopt methodological
individualism, the assumption that social situations or collective behaviors are the r
esult of individual actions.

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 Rational choice theory - assumptions

Rational choice theory makes two assumptions about individuals' preferences for ac
tions:
(1) Completeness - all actions can be ranked in an order of preference (indifference
between two or more is possible).
(2) Transitivity - if action a1 is preferred to a2, and action a2 is preferred to a3, then a

1 is preferred to a3.

Together these assumptions form the result that given a set of exhaustive and excl
usive actions to chose from, an individual can rank them in terms of her preference
s, and that her preferences are consistent.

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Rational choice theory – assumptions by J. Turner (1)

Jonathan Turner, The Structure of Sociological Theory , 5ed. (Belmont, Calif.: Wadsworth,
1991), p. 354.

1. Humans are purposive and goal oriented.

2. Humans have sets of hierarchically ordered preferences, or utilities.
3. In choosing lines of behavior, humans make rational calculations with respect to:
•the utility of alternative lines of conduct with reference to the preference
hierarchy
•the costs of each alternative in terms of utilities foregone
•the best way to maximize utility.

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Rational choice theory – assumptions by J. Turner (2)

4. Emergent social phenomena - social structures, collective decisions, and collective

behavior - are ultimately the result of rational choices made by utility-maximizing
individuals.
5. Emergent social phenomena that arise from rational choices constitute a set of
parameters for subsequent rational choices of individuals in the sense that they
determine:
•the distribution of resources among individuals
•the distribution of opportunities for various lines of behavior
•the distribution and nature of norms and obligations in a situation.

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 Rational choice theory

An individual's preferences can also take forms:

•Strict preference occurs when an individual prefers a1 to a2, but not a2 to a1.
•In some models, a weak preference can be held in which an individual has a prefer
ence for at least aj, similar to the mathematical operator.

•Indifference occurs when an individual does not prefer a1 to a2, or a2 to a1.

In more complex models, other assumptions are often incorporated, such as the assu
mption of independent axiom. Also, with dynamic models that include decision-maki
ng over time, time inconsistency may affect an individual's preferences.

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 Rational choice theory - Benefits

Benefits:

Describing the decisions made by individuals as rational and utility maximizing may seem t
o be a tautological explanation of their behavior that provided very little new information.
While there may be many reasons for a rational choice theory approach, two are important
for the social sciences.

First, assuming humans make decisions in a rational, rather than stochastic manner implies
that their behavior can be modeled and thus predictions can be made about future actions
.

Second, the mathematical formality of rational choice theory models allows social scientists
to derive results from their models that may have otherwise not been seen.

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 Rational choice theory - Criticism

Criticism:

Both the assumptions and the behavioral predictions of rational choice theory have
sparked criticism from various camps. Some people have developed models of
bounded rationality, which hope to be more psychologically plausible without com
pletely abandoning the idea that reason underlies decision-making processes.

For a long time, a popular strain of critique was a lack of empirical basis, but
experimental economics and experimental game theory have largely changed that c
ritique (although they have added other critiques, mainly by demonstrating some h
uman behavior that consistently deviates from rational choice theory).

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 Rational choice theory

In their 1994 piece, Pathologies of Rational Choice Theory: A Critique of

Applications of in Political Science (New Haven: Yale UP, 1994), Green and Shapiro
argue that the empirical outputs of rational choice theory have been limited.
They contend that much of the applicable literature, at least in Political Science, wa
s done with weak methods and that when corrected many of the empirical outcom
es no longer hold.
When taken in this perspective, Rational Choice Theory has provided very little to t
he overall understanding of political interaction - and is an amount certainly dispro
portionately weak relative to its appearance in the literature (Green and Shapiro, 19
94)

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 Rational choice theory – Summary (1)

Summary:

•Rational choice theory adopts a methodological individualist position and attempts to

explain all social phenomena in terms of the rational calculations made by self-interested
individuals.

•Rational choice theory sees social interaction as social exchange, modelled on economic
action. People are motivated by the rewards and costs of actions and by the profits that
they can make.

•Some rational choice theorists have seen rationality as a result of psychological

conditioning. Others have adopted the position that it is simply necessary to assume
that individuals act as if they were completely rational.

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 Rational choice theory – Summary (2)

•The problem of collective action poses great difficulties for rational choice theory,
which cannot explain why individuals join many kinds of groups and associations.

•The problem of social norms, the other aspect of the Hobbesian problem of order,
also poses difficulties. Rational choice theories cannot explain the origins of social
norms, especially those of altruism, reciprocity, and trust.

•The problem of social structure is a feature of methodological individualism, rather

than rational choice theory per se, but it creates difficulties for the theories considered.
Solutions to this problem have been in terms of the unintended consequences of
individual action.

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