Rational Behaviour

Rational behavior refers to decision-making that is consistent with an individual’s or organization’s goals and objectives, typically aiming to maximize utility or profit. In economics and finance, rational behavior assumes that individuals make choices based on available information, evaluating the costs and benefits of each option. This concept is a key assumption in many economic theories, although real-world decisions may be influenced by emotional, psychological, or social factors that deviate from purely rational behavior.

Example

A consumer exhibits rational behavior by comparing the prices and quality of different products before purchasing the one that offers the best value for money.