AP MicroeconomicsCore Economic Concepts
Rational Self-Interest
Rational self-interest is the assumption that individuals make decisions by comparing the expected marginal benefits and marginal costs of an action.
The rational self-interest model assumes that individuals have preferences, make decisions to maximize their utility, and do so by weighing the additional benefits against the additional costs of an action. This model is used to explain and predict human behavior in many economic contexts, such as consumer choice and firm production decisions.