The separation of economic efficiency and liberty is both perplexing and multifarious. Can values be accurately measured in economic terms? Are the measurements meaningful to the environment? One theory might have an answer. Rational choice theory is defined as, “a way of looking at deliberations between a number of potential courses of action, in which ‘rationality’ of one form or another is used either to decide which course of action would be the best to take, or to predict which course of action actually will be taken. Such a perspective finds itself in models for both human and behavior of non-human but nonetheless potentially rational entities, such as corporations or nation-states.”
What is considered to be rational?
The technical meaning in economics is about preferences: preferences are defined to be rational if they are complete and transitive. That is, that the decision-maker is able to compare all of the alternatives, and that these comparisons are consistent.
• If uncertainty is involved, then the independence axiom is often assumed in addition to rational preferences.
• If decision-making over time is involved, time consistency is generally assumed as well.
• Rationality can also mean that the decision-maker always chooses the most preferred option, as in the Utility Maximization problem.
Rational choice theory may help economists to better understand how an individual thinks regarding tastes and preferences. However, as we all know, not all are considered to be rational thinkers. Among the many policies, perhaps the amalgamation of liberty and economic efficiency may be the “solution matrimony” to a sustainable environmental policy.