Skip to content
Skip to main content

About this free course

Download this course

Share this free course

Making decisions
Making decisions

Start this free course now. Just create an account and sign in. Enrol and complete the course for a free statement of participation or digital badge if available.

3 The rational-economic perspective and its problems

3.1 Introduction

Much of economics and finance theory rests on the notion of people as formally rational decision makers. First, people are understood to have ordered preferences. That is, if someone prefers A to B and prefers B to C then they should prefer A to C. Second, decision makers are assumed to engage in a formally rational decision-making process on the basis of those preferences.