Quick Definition

Rational Choice Theory is an economic principle that assumes individuals always make prudent and logical decisions that provide them with the highest amount of personal utility.

Examples

• 1An investor choosing stocks based on thorough research and expected returns, rather than emotional attachments.
• 2A consumer deciding to save money by purchasing a reliable, used car instead of a new luxury model to maximize their financial stability.
• 3A business opting to outsource non-core activities to reduce costs and focus on its primary competencies, enhancing overall profitability.

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