Rational decision-making

Rational decision-making

Courses Info

Rational decision-making

 

Traditional neo-classical economists believe that consumers act rationally by making decisions that maximise their utility. They also believe firms act rationally to maximise their profits.

 

Utility refers to the satisfaction a consumer gets from the consumption of a product or service.

 

However many economists have challenged this school of thought with another called behavioural economics.

 

Behavioural economics

 

Behavioural economists believe that consumers and producers make decisions using the process of psychology e.g. emotions and habits

Tushar Depala

Author: Tushar Depala

Economics Tutor

View Profile Hire Tushar Depala