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Rational Choice Theory
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Some rational choice theorists have seen rationality as a result of psychological conditioning. Others have adopted the position that it is simply necessary to assume that individuals act as if they were completely rational.
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Blau's essay ... illustrates what Goode terms the "paradoxic al" relationship between sociology and rational-choice. Blau critiques classica l microeconomics for ignoring the role of "differences in resources, market shar e, and power among firms and corporations and the coalitions that rational actor s form to further their economic interests by opposing competition," and conclu des that "the assumption that an unseen hand will guide a powerful elite to make rational decisions that promote the commonweal is a chimera." In fact, he fail s to recognize the profound differences between classical microeconomics and con temporary rational-choice sociology. Nor does he apparently recognize that the factors he lists as ignored by classical microeconomics are all areas of intensi ve analysis and concern in contemporary economics (e.g., see Kreps 1990). As an alternative to "invisible hand" explanations, Blau argues that
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Basic to all forms of rational choice theory is the assumption that complex social phenomena can be explained in terms of the elementary individual actions of which they are composed. This standpoint, called methodological individualism, holds that:
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Other empirical studies ... suggest that multiple non-economic variables have strong influences on rational choices in market exchanges. As shown in examining the development of market relations in such diverse countries like England and Japan, sociological variables like class divisions, power hierarchy, and status distinctions have been of primary importance in this process relative to individual utility maximization (Lie, 1992). Another investigation (Hamilton and Biggart, 1988) reports similar findings for East Asia (Korea, Taiwan and Japan): the role of economic factors vis-à-vis social forces like power has been secondary in the development of market organization. Its conclusion is that market exchange cannot always be accounted for by strictly rational variables like profit or efficiency because these produce narrow explanations, thus supporting a broader multivariate model.
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A related influence on RCT is that of game theory – how individual actors make decisions in game like situations. Issues such as strategies, preferences, and decision-making processes come to the fore in these situations.
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Rational Choice Theory