Rational Choice Theory: Toward a Psychological, Social, and Material Contextualization of Human Choice Behavior

Abstract

The main purpose of this paper is to provide a brief overview of the rational choice approach, followed by an identification of several of the major criticisms of RCT and its conceptual and empirical limitations. It goes on to present a few key initiatives to develop alternative, more realistic approaches which transcend some of the limitations of Rational Choice Theory (RCT). Finally, the article presents a few concluding reflections and a table comparing similarities and differences between the mainstream RCT and some of the initial components of an emerging choice theory. Our method has been to conduct a brief selective review of rational choice theoretical formulations and applications as well as a review of diverse critical literature in the social sciences where rational choice has been systematically criticized. We have focused on a number of leading contributors (among others, several Nobel Prize Recipients in economics, who have addressed rational choice issues). So this article makes no claim for completeness. The review maps a few key concepts and assumptions underpinning the conceptual model and empirical applications of RCT. It reviews also a range of critical arguments and evidence of limitations. It identifies selected emerging concepts and theoretical revisions and adaptations to choice theory and what they entail. The results obtained, based on our literature reviews and analyses, are the identification of several major limitations of RCT as well as selected modifications and adaptations of choice theory which overcome or promise to overcome some of the RCT limitations. Thus, the article with Table 1 in hand provides a point of departure for follow-up systematic reviews and more precise questions for future theory development. The criticisms and adaptations of RCT have contributed to greater realism, empirical relevance, and increased moral considerations. The developments entail, among other things: the now well-known cognitive limitations ("bounded rationality") and, for instance, the role of satisficing rather than maximizing in decision-making to deal with cognitive T. Burns, E. Roszkowska 196 complexity and the uncertainties of multiple values; choice situations are re-contextualized with psychology, sociology, economic, and material conditions and factors which are taken into account explicitly and insightfully in empirical and theoretical work. Part of the contextualization concerns the place of multiple values, role and norm contradictions, and moral dilemmas in much choice behavior. In conclusion, the article suggests that the adaptations and modifications made in choice theory have led to substantial fragmentation of choice theory and as of yet no integrated approach has appeared to simply displace RCT.

Are millennial students better equipped to overcome choice bias?

“…These results were significant for both genders. The findings, while quite reasonable by themselves, contradict the results of similar experiments and are aligned with the assumptions of the classical theory of choice (Grünig & Kühn, 2017;Herrmann, 2014) that is based on the assumption of rational decision-making and is focused on few determinants of individual choices (Burns & Roszkowska, 2016). It appears that the millennials (in this aspect) are a closer model of 'Homo-Economicus' (Urbina & Ruiz-Villaverde, 2019).…”

Socio-economics: the Approach of Social Systems Theory in a Forty Year Perspective

“…The ASD approach to human behavior does not rely on the axiomatic of rational choice theory. Our basic assumptions are in large part incompatible with the usual narrow homo oeconomicus behavioral assumptions -that is, in brief, perfect foresight, perfect knowledge and perfect information about the available choice sets and their elements, and the capacity to optimize on the part of individuals and collectives (Baumgartner et al, 1986;Burns and Roszkowska, 2016). On one side, mainstream economic assumptions are more encompassing, on the other, they are more restrictive.…”

“…The ASD research made two major contributions: (A) It expanded and applied a dynamic, actor-oriented systems theory and (B) it developed coherent ways of overcoming the separation between economics and sociology in a new transdisciplinary synthesis, "socioeconomics" (Baumgartner et al, 1975(Baumgartner et al, , 1986Baumgartner et al, 1976;Baumgartner, 1979;Burns, 1990;Burns andDeVille, 2003, 2006;Burns and Flam, 1987;Burns and Roszkowska, 2016).…”

“…The theoretical framework was used to analyze a variety of scientific and policy problems from a multi-disciplinary and dynamic perspective: the complex interplay between economic and socio-political institutions, conflicts and struggles over economic resources and economic institutions, problems of development and underdevelopment, and inflation and unemployment. The research resulted in a number of publications (from the 1970s (Baumgartner et al, 1975;Baumgartner et al, 1976;Baumgartner, 1977;Baumgartner, 1979;Burns et al, 1979;DeVille and Burns, 1976)); in the 1980s (Baumgartner et al, 1986;Burns et al, 1985;Burns and Flam, 1987), and more recently (Burns, 1990;Burns andDeville, 2003, 2006;Burns et al, 2013;Burns and Roszkowska, 2016;Carson et al, 2003).…”

Worker Commitment and Organizational Citizenship Behaviour in the Age of Wisdom: Critical Evaluations

“…The purpose of rational choice theory (RCT) is to explain social phenomena by assuming rational choice at the actor's level [14], [24], [43, p.1]. However, RCT is not without its many critics [9], [29], [41], [22], [32], [25], [45]. Hence, according to [9, p.196], the rational choice approach, of which classical game theory is a variant, has been until recently, the dominant approach for conceptualizing human action in the social sciences.…”