Rational Choice Flashcards
RCT Origins (and Types)
Emerged in the 1960s in the US, blending economics and political science.
Types: Rational actor theory (individual), Public choice theory (governments), Social choice theory (aggregating individuals).
Content-based assumption on human behavior, rational and self-interested.
Situating Rational Choice Theory:
Shares features with behavioralism: positivism epistemology, foundationalist ontology, and privileging quantitative methodology.
Core Characteristics:
Foundationalist ontology (objectivist view of being).
Positivist epistemology (scientific knowledge).
Privileges quantitative methodology.
Deductive approach, starting with theory.
Theoretical Models:
Aims for accurate prediction of aggregate behavior, not detailed decision reconstruction.
Based on idealization, focusing on macro-level behavior
Early RCT - Adam Smith’s Invisible Hand:
Reference to the invisible hand in “Wealth of Nations” (1776).
Behavior organized by self-interest at the macro level.
RCT Assumptions in Non-Economic Settings:
Applies rational choice assumptions to non-economic settings.
Example: Purpose of colleges and universities.
Methodological Individualism:
Shared assumptions with behavioralism.
Behavior is predictable based on individual interests, preferences, and actions.
Unitary actor assumption: Applicable logic to collective units.
RCT and the Simple Question:
Answers the “Why do people behave the way they do?” question with homo economicus assumptions.
Assumptions: Rationality & Self-interest:
People act to secure goals reflecting their self-interest.
Instrumental rationality: Identifying actions to achieve goals through cost-benefit analysis.
Groups have fixed, self-interested goals pursued rationally.
What does RCT assume for Interests and Preferences
Assumed to be complete, stable, and transitive.
Stable and fixed preferences are integral to RCT.
Unitary Actor Assumption
Logic of collective action: Rational individuals form rational groups.
Group members contribute to a common goal if everyone agrees it’s worthwhile.
Logic of Collective Action:
Individual rationality can lead to collective suboptimality.
Political questions arise about government manipulation of behaviors.
Game Theory - The Prisoners’ Dilemma:
Illustrates rational choice with a Nash equilibrium vs. Pareto optimal outcome.
Nash equilibrium often not collectively rational.
Solutions to Collective Action Problems
Rational choice perspective suggests changing incentives (via rewards, sanctions or nudges), government regulation.
Answers outside the perspective include socialization and norms.
Olsen’s Logic of Collective Action (1965):
Olsen challenges the assumption that group members contribute to a collective goal.
Distinguishes privileged, intermediate, and latent groups with varying contributions.
Criticisms of RC: Rationality:
Flawed rationality assumption due to imperfect information, cognitive limitations, and time constraints.
RC response: Bounded rationality, where individuals satisfice rather than maximize.
Criticisms of RC: Self-Interest:
Focuses on self-interests challenges other possible motives: altruism, spite, and expressive motives.
RC response: Other-regarding preferences can be explained in terms of individual benefit.
Criticisms of RC: Agency:
Not all individuals make the same choices even with similar conditions.
Influenced by structures, institutions, ideals, ideology.
RC response: Models focus on macro-effects, not individual-level accuracy.
Criticisms of RC: Equilibrium
Explains stability, not change over time.
Political scientists often interested in causes of change, not what explains the status quo
Criticisms of RC: Neoliberal Ideology:
Supports competitive markets, consumer approach to public goods, and government manipulation through incentives.
Olsen: Logic of Collective Action, the privileged group
Definition: Group where at least one member values the common good enough to bear the entire cost.
Characteristics:
One member’s contribution leads to Pareto optimality.
Free riding is possible.
Individual cost/benefit calculations may differ.
Privileged groups do not face collective action problems.
Olsen: Logic of Collective Action, the intermediate group
Definition: Group where individual actions have a perceptible effect on others.
Characteristics:
Allows for monitoring.
Coordination is possible to solve collective action problems.
Selective incentives (rewards/punishments) tied to individual contributions.
Intermediate groups can still suffer collective action problems if contributions are not enforced.
Olsen: Logic of Collective Action, the latent group
Definition: Group where the effect of individual action is not easily observable.
Characteristics:
Actions are not easily perceptible.
Selective incentives (rewards/punishments) needed.
Requires an external enforcer (government/institution) with power.
Latent groups commonly face widespread collective action problems.
