What is rational behavior?

Rational behavior refers to a decision-making process that is based on making choices that result in the optimal level of benefit or utility for an individual. The assumption of rational behavior implies that people would rather take actions that benefit them versus actions that are neutral or harm them.

What is irrational behavior?

Irrational behavior, however, is focused on momentary perceptions and does not focus on the facts of reality. As a result, they are unsupported by the known facts. When facts and figures accompany reality, it is said to be the outcome of rational behavior. Irrational behaviors result from emotional choices and may lack any logical aspects.

Which economic theory is based on rational behavior?

Most classical economic theories are based on the assumption that all individuals taking part in an activity are behaving rationally. Rational behavior refers to a decision-making process that is based on making choices that result in an optimal level of benefit or utility.

What is economic behavior?

This type of behavior is often referred to as “economic behavior.” In economic theory, it is a fundamental assumption that entities engage in rational thinking when making decisions. Rational behavior enables individuals to make optimal choices from a set of options, which may not always yield the best possible materialistic outcomes.