The Theory of Rational Choice

Rational choice theory says that when faced with a risky decision, rational actors ought to choose the option that maximizes their expected utility. Steven Pinker: Discoveries from psychology lab showing people seem to violate the theory have been touted as undermining foundations of classical economics. He says even if there were some result ahead of a psychology lab that showed that people flattered the rules of market economies, that doesn't mean that therefore there is something dubious about the market.