What you’ll learn to do: explain the assumption of economic rationality

Economists assume that human decision-making is predictable and rational. They believe that, when making choices, people basically try to avoid costs and maximize benefits to themselves. In this section, you’ll learn more about the principle of economic rationality and the role it plays in economic models.

The specific things you’ll learn in this section include the following:

• Define rationality in an economic context
• Provide examples of rational decision-making

Learning Activities

The learning activities for this section include the following:

• Reading: Rationality and Self-Interest
• Reading: Rationality in Action
• Self Check: Economic Rationality