The essay focuses mainly on understanding rational behavior and the optimum social concept, Rational behavior is a decision-making process that bases on making choices that result in utility for an individual. Mainly, it assumes that people would rather make choices that benefit rather than harm them. Rational behavior is the foundation of the rational choice theory, which assumes that people make choices resulting in higher utility. Notably, rational behavior doesn’t always involve receiving the most material and monetary benefit. Satisfaction can be non-monetary and emotional. The article provides an understanding of rational behavior and the optimum social concept in economics.
understanding rational behavior and optimum social concept
SOCIAL OPTIMUM CONCEPT AND THE MANUAL OF POLITICAL ECONOMY
The optimum social concept is an idea crafted by Pareto, who disagreed with the cardinal utility hypothesis. Significantly, he arrived at the welfare conclusions that did not require any inter-personal comparison. Three objectives led to Pareto coming up with the optimum social concept. First, was clarifying and quantifying the concept of economic welfare. Secondly, it was developing welfare propositions that were free of value-judgment in a scientific way. Lastly, it was clearly stating what economists had to say on matters of public policy. Thus, the essay will help in understanding rational behavior and how it applies to the optimum social concept.
optimum social concept and the manual of political economy
UNDERSTANDING RATIONAL BEHAVIOR, SOCIAL OPTIMUM CONCEPT AND RATIONALITY IN ECONOMIC
Rationality in economics can lead to the achievement of social optimum. Notably, there lacks the notion of rationality in the existent economic theories. However, there is a key concept forming the basis of economic theorizing. Therefore, the neoclassical conception of economic rationality provides that rationality consists mainly of maximizing subjective utility. Primarily, that involves maximizing one’s desires. People mostly at times assume that subjective utility is similar to self-interest. However, the subjective utility notion is different from self-interest because one may have preferences not motivated by self-interest. Lastly, Understanding rational behavior can help in developing ways of achieving an optimum social concept.
optimum social concept and rationality in economics
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