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RATIONAL CHOICE
Discipline And Ideas In Social Science
Overview of the Topic
1. Introduction of RCT (
Rational Choice Theory)
2. Growth of RCT
3. Assumption of the RCT
a. Individualism
b. Optimality
c. Structures
d. Self-Regarding Interest
e. Rationality
4. Steps in RCT Process
5. Strength of RCT
6. Application of RCT
a. Gaming
b. Party Politics
c. Legislation
d. Public Good
e. Coalition Building
7. RCT and Collective Action
8. Criticism of RCT
INTRODUCTION
•The rational choice theory, also known as choice theory
or rational action theory, is a theory for understanding
and often modelling social and economic as well as
individual behaviour. It is the main paradigm in the
currently-dominant microeconomics school of thought.
It is also central to modern political science, as well as
other disciplines such as sociology and philosophy.
• “The rational choice theory was early popularized
by a 1992 Nobel MemorialPrize Laureate in
Economics Science, Gary Becker, who was one
of the first to apply rational actor models
more widely”. Elster (1989) stated the essence of
rational choice theory when he said that “when
faced with several courses of action, people usually
do what they believe is
likely to have the best overall outcome”.
•Contemporary political theory, the so-called rational
choice model, starts with the assumption that actors
know what they want and can order their wants
transitively. (These formulations are probably
equivalent. To know what one wants requires one to
choose the best from among several goals and, failing
to attain it, to choose the second best, etc. To order
three goals is to decide that one is better than either of
the other two and that a second is better than a third,
which is exactly a transitive ordering
•The concept of rationality used in rational choice theory is
different from the colloquial and most philosophical use of
the word. Colloquially, "rational" behaviour typically means
"sensible", "predictable", or "in a thoughtful, clear-headed
manner." Rational choice theory uses a narrower definition of
rationality. At its most basic level, behavior is rational if it is
goal- oriented, reflective (evaluative), and consistent (across
time and different choice situations). This contrasts with
behavior that is random, impulsive, conditioned, or adopted
by (unevaluative) imitation.
GROWTH OFTHERATIONAL CHOICE THEORY
• Rational choice is argued to have developed as part of the behavioural
revolution in American political science of the 1950sand 1960s which sought
to investigate how individuals behaved, using empirical methods.
• Olson (1965) showed that individuals with self interest would not always
take part in collective action to accomplish a common goal, for instance, why
would some of us refuse to pay our tax despite the fact that the monies
derived from taxes are used to develop our society; improve basic amenities
and security. This has lead to the development of the collective action theory,
which can assist us to explain how collective actions failures can be grossly
reduced if the decision-makers involved are small.
• Upon the foundation of individualism, the rational choice theory
may go further to portray how sharing, cooperation, or norms
emerge, and the role they play in the decision making process.
• The rational choice theory begins, firstly, from the viewpoint of the
individual, as opposed to viewing several individuals interacting
together, social situations, or groups.
• It begins with a few simple assumptions about the individual and the
relationship among individuals, and then builds models of social
action and interaction that describe and explain the complexities of
larger groups, systems, and whole societies.
•This approach is very different from the systems and
structural approaches of Durkheim or Parsons, who make
social norms and values at the societal level an essential
feature of their perspective. It also differs from the writers in
the Marxian and Weberian traditions that emphasize large-
scale, global, and historical social forces. The rational
choice theory also runs opposed to the symbolic interaction,
interpretive, and feminist approaches that adopts a dense and
complex view of social actors and social interaction.
•The latter consider meaning, interpretation,
emotions, experiences, and a wide variety of
aspects of human existence, none of which can
be reduced to the other, nor is capable of
simple explanation. Contrastingly, the theory
adopts a relatively spare and simple model of
the individual, one that can be applied across
time and space, so that it is a universal model.
ASSUMPTIONS OFTHERATIONALCHOICETHEORY
•There are a few assumptions made by rational choice
theorists. Abell (2000) noted three assumptions made
by rational choice theorists. These assumptions include:
1. Individualism – it is individuals who ultimately take
actions. Individuals, as actors in the society and
everywhere, behave and act always as rational beings,
selfcalculating, self-interested and self-maximizing,
these individual social actions are the ultimate source of
larger social outcomes.
2. Optimality – Individual choose their actions
optimally, given their individual preferences as well as
the opportunities or constraints with which the individual
faced. Abell (2000) defines optimality as taking place
when no other course of social action would be preferred
by the individual over the course of action the individual
has chosen. This does not mean that the course of action
that the actor adopts is the best in terms of some
objective, and outside judgment. The rational choice
theory, therefore assumes, according to Abell (2000), that
individuals “do the best they can, given their
circumstances as they see them”.
3.Structures - Abell argues that structures and
norms that dictate a single course of action are
merely special cases of rational choice
theory.Although these structures may be damaging
to the rational choice model, individuals will often
find a way to exercise action optimally, hence the
rational choice model may not necessarily show
harmony, consensus, or equality in courses of
action.
4.Self-Regarding Interest – This assumption states that the
actions of the individual are concerned entirely with his or her
own welfare. Abell (2000) noted that in as much as this is a key
assumption in the rational choice approach, is not as essential to
the approach as the assumption on optimality. He also noted that
various types of group sentiments could exist, such as
cooperation, unselfishness, charity, which initially may seem to
be contrary to individual optimality. Rational choice theorist
may argue that these sentiments can be incorporated into the
rational choice model by observing that such sentiments may
ultimately be aimed at pursuing some form of self-interest.
5. Rationality – This appears the most
predominant assumption of the rational
theory. All individuals, according to this
assumption act in ways that would benefit
them more; every individual is most like to
undertake courses of actions that they
perceive to be the best possible option and
one that would immensely be to their own
advantage.
STEPSIN THERATIONALCHOICEPROCESS
•In order for a decision or choice process to be
accepted as rational outside the individual,
such a choice process must be arrived at
based on certain steps that form the guideline
for concluding such actions as rational. Green
(2002) outlined certain steps which he believes
the rational choice analysis should follow:
• (1) Identify the relevant agents and make assumptions about their
objectives.
• (2) Identify the constraints faced by each agent.
• (3) Determine the “decision rules” of each agent, which characterize
how an agent’s choices respond to changes of one kind or another –
This task is usually accomplished mathematically by the solution of a
constrained optimization problem.
• (4) Determine how the decision rules of various agents may be made
consistent with one another and thereby characterize the equilibrium
of the model. Effective analysis of complex interactions between
agents normally involves the use of mathematical methods, which
can sometimes be quite sophisticated.
•(5) Explore how the equilibrium of the model changes
in response to various external events. That is,
determine the predictions or implications of the model.
Again, this step can involve substantial use of
mathematics.
•(6) Examine whether the predictions determined in step
(5) above are consistent with actual experience.
•(7) Draw conclusions and any implications (for
government policy, for example) implied by (6).
STRENGHTSOFTHERATIONAL CHOICETHEORY
•The rational choice theory has largely emerged in
the political science subfield. It has been
commended as the prototype for a more deductive
approach to political analysis. Becker (1976) has
described the rational choice model as “a unified
framework for understanding all human
behaviour”. Other advantages of the rational
choice theory can be summarized as;
1. Generality; This means that one set of
assumptions relating to each type of actor in a
given circumstance, is compatible with any set
of structural assumptions about the
environmental setting in which the actor is
present.
•Parsimony; The common knowledge of
rationality assumption, the assumption of
isomorphic and self-regarding utility function,
when combined with the rational optimization
model, allow rational choice theories to treat
variations in choices among actors and by an
actor over time as entirely a function of their
structural position. Preferences and beliefs are
simply perceived as the only relevant variables
for determining action.
•Predictive;Assumptions of the rational choice
model have been used to produce a wide
variety of decisive theories, whose predictions
about the measurable real world phenomena
rule out a much larger set of outcomes than
what is already generally accepted to be
unlikely. The decisiveness of rational choice
theories depends on structural as well as the
individual actor’s assumptions.
APPLICATION OFRATIONAL CHOICE
• The rational choice theory is a growing paradigm in political
science and can be applied to a range of areas in the
discipline, especially, voting behaviour, policy formulation
and implementation, rule formation, among others.
• Gaming: This is a mathematical means of viewing
competitions between small numbers of ‘players’. These
players have to compete in such a way that the result of such
competition would satisfy the interest of each member of the
team. In reaching this result, every member of the team is
assumed to be rational and would hence seek his/her own
interest first before that of the team to which he/she belongs.
•Party Politics: Competition among
political parties can be dismissed as
rational, based on the assumptions of the
rational choice model. Every political
party will always engage in activities that
will ultimately lead to the realisation of
their own interests maybe alongside
pursuing democratic orother purposes of
governance.
•Legislation: Most of the time, if not all of the
time, bills and policy suggestions made by
members of the legislative chamber are made
with the aim of achieving some form of
personal interests first, and maybe the interest
of the public could follow. Individuals, in the
first place, get appointed into legislatives
offices to fulfil some form of personal interests
as against the intention to serve the public.
•Public Good: Collective actions have been
described as activities that are pursued in the
interest of the public. However, arguments
have arose indicating that the only conditions
under which individuals will pursue public
interest are cohesion, small public and
increase in compensation, against these
conditions, individuals will ultimately pursue
their individual interests.
•Coalition Building: The place of rationality in
building coalitions cannot be overemphasized.
Coalitions are built for the purpose of gaining
more influence and power which may be
difficult for the individual organization to
develop on its own. Some instances of
coalitions in politics could include combining
votes in an elected body or combining
resources during a political or civic campaign.
RATIONAL CHOICEAND COLLECTIVEACTION
•Individuals are perceived by the rational choice
approach as being rational, self-calculating, self
interested and self maximizing, hence, it is difficult
for individuals to participate in collective action or
work towards the good of the public unless the
public good would lead ultimately to their own
interests. Olson (1965) identified three different
types of groups within which an individual can
exist, namely;
•Privileged groups: These are groups in which members are
most likely to gain more from a public good than they
would have gained if they had to provide for such good by
themselves.
•Latent groups: Member of the latent group could free ride
(withhold his contribution to the public good), without
causing any observable reduction in the supply of such
good.
•Intermediate groups: (if any member of this group
withholds his contribution, it will cause a noticeable
decrease in supply of the good, or a noticeable rise in cost
to other contributors)
CRITICISMS
•Several critique and scholars have identified
certain shortfalls of the rational choice
approach. Aside, some of the disagreements
that have been associated with accepting the
basic assumptions of the approach, there are
a number of other weaknesses that have been
attributed with the rational choice theory.
Some of these weaknesses are:
•1. Problems associated with inadequate
information and uncertainty. This may make it
difficult for individuals to make rational decisions.
As a result, they may rely on other ways of making
decisions.
• 2. Human social action and interactions are
complex, and many of the theories examined
earlier may provide better guides to how these take
place.
•3. Theorists of rational choice argue that macro
level structures and institutions can be explained
from the models of individual social action. But
there are problems of aggregation of individual to
societal level phenomena. These same difficulties
exist in well developed economic models.
•4. Norms and habits may guide much action, and
once these take root people may not question them
but use them to pursue meaningful social action.
•5. One problem of RCT is that some theorists
argue that almost everything humans do is
rational, even philanthropy and self-sacrifice.
By expanding to include all forms of action as
rational, action that is non-rational or
irrational becomes part of the model. By
including every possible form of action in
rational choice, it is not clear how the
standards of what is rational and what is not
are constructed.

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rational-choice-181002112947.pptx

  • 1. RATIONAL CHOICE Discipline And Ideas In Social Science
  • 2. Overview of the Topic 1. Introduction of RCT ( Rational Choice Theory) 2. Growth of RCT 3. Assumption of the RCT a. Individualism b. Optimality c. Structures d. Self-Regarding Interest e. Rationality 4. Steps in RCT Process 5. Strength of RCT 6. Application of RCT a. Gaming b. Party Politics c. Legislation d. Public Good e. Coalition Building 7. RCT and Collective Action 8. Criticism of RCT
  • 3. INTRODUCTION •The rational choice theory, also known as choice theory or rational action theory, is a theory for understanding and often modelling social and economic as well as individual behaviour. It is the main paradigm in the currently-dominant microeconomics school of thought. It is also central to modern political science, as well as other disciplines such as sociology and philosophy.
  • 4. • “The rational choice theory was early popularized by a 1992 Nobel MemorialPrize Laureate in Economics Science, Gary Becker, who was one of the first to apply rational actor models more widely”. Elster (1989) stated the essence of rational choice theory when he said that “when faced with several courses of action, people usually do what they believe is likely to have the best overall outcome”.
  • 5. •Contemporary political theory, the so-called rational choice model, starts with the assumption that actors know what they want and can order their wants transitively. (These formulations are probably equivalent. To know what one wants requires one to choose the best from among several goals and, failing to attain it, to choose the second best, etc. To order three goals is to decide that one is better than either of the other two and that a second is better than a third, which is exactly a transitive ordering
  • 6. •The concept of rationality used in rational choice theory is different from the colloquial and most philosophical use of the word. Colloquially, "rational" behaviour typically means "sensible", "predictable", or "in a thoughtful, clear-headed manner." Rational choice theory uses a narrower definition of rationality. At its most basic level, behavior is rational if it is goal- oriented, reflective (evaluative), and consistent (across time and different choice situations). This contrasts with behavior that is random, impulsive, conditioned, or adopted by (unevaluative) imitation.
  • 7. GROWTH OFTHERATIONAL CHOICE THEORY • Rational choice is argued to have developed as part of the behavioural revolution in American political science of the 1950sand 1960s which sought to investigate how individuals behaved, using empirical methods. • Olson (1965) showed that individuals with self interest would not always take part in collective action to accomplish a common goal, for instance, why would some of us refuse to pay our tax despite the fact that the monies derived from taxes are used to develop our society; improve basic amenities and security. This has lead to the development of the collective action theory, which can assist us to explain how collective actions failures can be grossly reduced if the decision-makers involved are small.
  • 8. • Upon the foundation of individualism, the rational choice theory may go further to portray how sharing, cooperation, or norms emerge, and the role they play in the decision making process. • The rational choice theory begins, firstly, from the viewpoint of the individual, as opposed to viewing several individuals interacting together, social situations, or groups. • It begins with a few simple assumptions about the individual and the relationship among individuals, and then builds models of social action and interaction that describe and explain the complexities of larger groups, systems, and whole societies.
  • 9. •This approach is very different from the systems and structural approaches of Durkheim or Parsons, who make social norms and values at the societal level an essential feature of their perspective. It also differs from the writers in the Marxian and Weberian traditions that emphasize large- scale, global, and historical social forces. The rational choice theory also runs opposed to the symbolic interaction, interpretive, and feminist approaches that adopts a dense and complex view of social actors and social interaction.
  • 10. •The latter consider meaning, interpretation, emotions, experiences, and a wide variety of aspects of human existence, none of which can be reduced to the other, nor is capable of simple explanation. Contrastingly, the theory adopts a relatively spare and simple model of the individual, one that can be applied across time and space, so that it is a universal model.
  • 11. ASSUMPTIONS OFTHERATIONALCHOICETHEORY •There are a few assumptions made by rational choice theorists. Abell (2000) noted three assumptions made by rational choice theorists. These assumptions include: 1. Individualism – it is individuals who ultimately take actions. Individuals, as actors in the society and everywhere, behave and act always as rational beings, selfcalculating, self-interested and self-maximizing, these individual social actions are the ultimate source of larger social outcomes.
  • 12. 2. Optimality – Individual choose their actions optimally, given their individual preferences as well as the opportunities or constraints with which the individual faced. Abell (2000) defines optimality as taking place when no other course of social action would be preferred by the individual over the course of action the individual has chosen. This does not mean that the course of action that the actor adopts is the best in terms of some objective, and outside judgment. The rational choice theory, therefore assumes, according to Abell (2000), that individuals “do the best they can, given their circumstances as they see them”.
  • 13. 3.Structures - Abell argues that structures and norms that dictate a single course of action are merely special cases of rational choice theory.Although these structures may be damaging to the rational choice model, individuals will often find a way to exercise action optimally, hence the rational choice model may not necessarily show harmony, consensus, or equality in courses of action.
  • 14. 4.Self-Regarding Interest – This assumption states that the actions of the individual are concerned entirely with his or her own welfare. Abell (2000) noted that in as much as this is a key assumption in the rational choice approach, is not as essential to the approach as the assumption on optimality. He also noted that various types of group sentiments could exist, such as cooperation, unselfishness, charity, which initially may seem to be contrary to individual optimality. Rational choice theorist may argue that these sentiments can be incorporated into the rational choice model by observing that such sentiments may ultimately be aimed at pursuing some form of self-interest.
  • 15. 5. Rationality – This appears the most predominant assumption of the rational theory. All individuals, according to this assumption act in ways that would benefit them more; every individual is most like to undertake courses of actions that they perceive to be the best possible option and one that would immensely be to their own advantage.
  • 16. STEPSIN THERATIONALCHOICEPROCESS •In order for a decision or choice process to be accepted as rational outside the individual, such a choice process must be arrived at based on certain steps that form the guideline for concluding such actions as rational. Green (2002) outlined certain steps which he believes the rational choice analysis should follow:
  • 17. • (1) Identify the relevant agents and make assumptions about their objectives. • (2) Identify the constraints faced by each agent. • (3) Determine the “decision rules” of each agent, which characterize how an agent’s choices respond to changes of one kind or another – This task is usually accomplished mathematically by the solution of a constrained optimization problem. • (4) Determine how the decision rules of various agents may be made consistent with one another and thereby characterize the equilibrium of the model. Effective analysis of complex interactions between agents normally involves the use of mathematical methods, which can sometimes be quite sophisticated.
  • 18. •(5) Explore how the equilibrium of the model changes in response to various external events. That is, determine the predictions or implications of the model. Again, this step can involve substantial use of mathematics. •(6) Examine whether the predictions determined in step (5) above are consistent with actual experience. •(7) Draw conclusions and any implications (for government policy, for example) implied by (6).
  • 19. STRENGHTSOFTHERATIONAL CHOICETHEORY •The rational choice theory has largely emerged in the political science subfield. It has been commended as the prototype for a more deductive approach to political analysis. Becker (1976) has described the rational choice model as “a unified framework for understanding all human behaviour”. Other advantages of the rational choice theory can be summarized as;
  • 20. 1. Generality; This means that one set of assumptions relating to each type of actor in a given circumstance, is compatible with any set of structural assumptions about the environmental setting in which the actor is present.
  • 21. •Parsimony; The common knowledge of rationality assumption, the assumption of isomorphic and self-regarding utility function, when combined with the rational optimization model, allow rational choice theories to treat variations in choices among actors and by an actor over time as entirely a function of their structural position. Preferences and beliefs are simply perceived as the only relevant variables for determining action.
  • 22. •Predictive;Assumptions of the rational choice model have been used to produce a wide variety of decisive theories, whose predictions about the measurable real world phenomena rule out a much larger set of outcomes than what is already generally accepted to be unlikely. The decisiveness of rational choice theories depends on structural as well as the individual actor’s assumptions.
  • 23. APPLICATION OFRATIONAL CHOICE • The rational choice theory is a growing paradigm in political science and can be applied to a range of areas in the discipline, especially, voting behaviour, policy formulation and implementation, rule formation, among others. • Gaming: This is a mathematical means of viewing competitions between small numbers of ‘players’. These players have to compete in such a way that the result of such competition would satisfy the interest of each member of the team. In reaching this result, every member of the team is assumed to be rational and would hence seek his/her own interest first before that of the team to which he/she belongs.
  • 24. •Party Politics: Competition among political parties can be dismissed as rational, based on the assumptions of the rational choice model. Every political party will always engage in activities that will ultimately lead to the realisation of their own interests maybe alongside pursuing democratic orother purposes of governance.
  • 25. •Legislation: Most of the time, if not all of the time, bills and policy suggestions made by members of the legislative chamber are made with the aim of achieving some form of personal interests first, and maybe the interest of the public could follow. Individuals, in the first place, get appointed into legislatives offices to fulfil some form of personal interests as against the intention to serve the public.
  • 26. •Public Good: Collective actions have been described as activities that are pursued in the interest of the public. However, arguments have arose indicating that the only conditions under which individuals will pursue public interest are cohesion, small public and increase in compensation, against these conditions, individuals will ultimately pursue their individual interests.
  • 27. •Coalition Building: The place of rationality in building coalitions cannot be overemphasized. Coalitions are built for the purpose of gaining more influence and power which may be difficult for the individual organization to develop on its own. Some instances of coalitions in politics could include combining votes in an elected body or combining resources during a political or civic campaign.
  • 28. RATIONAL CHOICEAND COLLECTIVEACTION •Individuals are perceived by the rational choice approach as being rational, self-calculating, self interested and self maximizing, hence, it is difficult for individuals to participate in collective action or work towards the good of the public unless the public good would lead ultimately to their own interests. Olson (1965) identified three different types of groups within which an individual can exist, namely;
  • 29. •Privileged groups: These are groups in which members are most likely to gain more from a public good than they would have gained if they had to provide for such good by themselves. •Latent groups: Member of the latent group could free ride (withhold his contribution to the public good), without causing any observable reduction in the supply of such good. •Intermediate groups: (if any member of this group withholds his contribution, it will cause a noticeable decrease in supply of the good, or a noticeable rise in cost to other contributors)
  • 30. CRITICISMS •Several critique and scholars have identified certain shortfalls of the rational choice approach. Aside, some of the disagreements that have been associated with accepting the basic assumptions of the approach, there are a number of other weaknesses that have been attributed with the rational choice theory. Some of these weaknesses are:
  • 31. •1. Problems associated with inadequate information and uncertainty. This may make it difficult for individuals to make rational decisions. As a result, they may rely on other ways of making decisions. • 2. Human social action and interactions are complex, and many of the theories examined earlier may provide better guides to how these take place.
  • 32. •3. Theorists of rational choice argue that macro level structures and institutions can be explained from the models of individual social action. But there are problems of aggregation of individual to societal level phenomena. These same difficulties exist in well developed economic models. •4. Norms and habits may guide much action, and once these take root people may not question them but use them to pursue meaningful social action.
  • 33. •5. One problem of RCT is that some theorists argue that almost everything humans do is rational, even philanthropy and self-sacrifice. By expanding to include all forms of action as rational, action that is non-rational or irrational becomes part of the model. By including every possible form of action in rational choice, it is not clear how the standards of what is rational and what is not are constructed.