Utility maximization rule

Critics of the marginal utility theory have articulated the water-diamond paradox. They believed that water should have maximum usefulness, since it is vital, and diamonds - minimum, because without them you can live peacefully. Therefore, the price of water should be higher than that of diamonds.

This contradiction was resolved as follows. In nature, water reserves are not limited, and diamonds are rare. Consequently, the total utility of water is large, but the marginal utility is small, while for diamonds, on the contrary, the total utility is small, and the marginal utility is large. The price is determined not by the total, but by the marginal utility. The relationship between marginal utility and price can be illustrated by the following formula:

where MU x , MU y , MU z- marginal utility of goods; P x , R y , R z- the price of these benefits.

This ratio demonstrates utility maximization rule: the consumer's income should be distributed in such a way that the last ruble spent on the acquisition of each type of goods would bring the same marginal utility. For example, a consumer is going to purchase three goods A, V, WITH to meet your needs. Let us assume that the marginal utility of the good A is 100 yutile, good B- 80 yutils, benefits WITH- 45 yutils. Moreover, the price of the good A is equal to 100 rubles, benefits B- 40 rubles, benefits WITH- 30 rubles. We present these data in table. 4.2.

Table 4.2

Marginal utility and price of goods

As can be seen from the table, the distribution of the consumer's money does not bring him maximum utility, since the rule of utility maximization is not observed. Since the good V brings the maximum weighted utility (i.e. marginal utility per 1 ruble of costs), then the money must be distributed in such a way as to increase the amount of consumption of the good B and reduce the consumption of the good A... In this case, the rule of maximizing utility must be fulfilled.

The consumer should refuse the last copy of the good A, and purchase for the saved 100 rubles. 2.5 parts of the good V... As a result, we get the following ratio (Table 4.3).

Table 4.3

Consumer Equilibrium in Cardinalist Theory

Having thus distributed the monetary income among the goods A, V and WITH, the consumer will be able to extract maximum satisfaction of his needs.

The economy is called the sphere of public life, covering the interaction of production and consumption.

Economics is the science that studies the behavior of participants in the process economic activity... It is also a way of organizing the activities of people aimed at creating the benefits they need.

This scientific discipline is divided into two sections: microeconomics and macroeconomics.

Microeconomics involves the analysis of the economic actions of individuals, individual households, firms and industries.

In this test work some components of microeconomics will be considered.

Rarity (limited) resources

Any production is, as a rule, a purposeful expenditure of resources to obtain any results and satisfy needs. If we analyze the economic organization of production, then we can say that people live in peace disabilities... Human resources (material, financial, labor, etc.) have qualitative and quantitative limitations.

The scarcity of resources in the modern economy is divided into two types: absolute (lack of resources to satisfy all needs at the same time) and relative (when there are resources to meet any part of the needs).

Economic resources are scarce or available in limited quantities, and the needs of society and its members are unlimited. Therefore, society is forced to constantly solve the problem of choice, to make a decision about which goods and services should be produced and which ones to refuse. At the same time, it is necessary to achieve the most expedient and effective use of rare resources to fully meet the needs of society and its members.

Rational economic choice

In conditions of limited resources, a large role is played by the consumer's choice between the options for using resources. The optimality of the economic choice depends on the costs and the results obtained.

There are three main actors in the economy: consumer, producer and society. In conditions of limited resources, the consumer must measure his income with expenses. The manufacturer decides what to produce, in what quantity, also weighing all costs and revenues. This is how a rational economic choice is formed. That is, with a minimum of costs, the maximum result is provided.

At the cost of the good, which is very different, the consumer decides what will be profitable for him to purchase. And if he chooses this or that product at a favorable price, knowing what it will bring good result, then we can talk about a rational (optimal) economic choice. Therefore, it is associated with the assessment of the opportunity cost of the good.

Household as a market entity

A household is a unit of one or more people. It operates in the consumer sector. Households sell on the market their labor and goods belonging to them in the form of certain types of goods and services, as well as in the form of land, capital, property. Most households would like to increase the quantity of consumed goods and services and improve their quality, depending on the degree of their limited income.

The household is characterized by:

· Manual labor;

· Old equipment;

· Slow pace of development;

· Traditional production methods.

Household economy has been developing since ancient times of the slaveholding, feudal system, collective farms. Today it can be divided into three main types: urban, rural and suburban.

V modern society there are two main forms of economy: natural and commercial.

In the natural form of the economy, the production of material goods and services is carried out for consumption within the economic unit itself.

The commodity form of the economy is a form in which material goods and services are produced by separate commodity producers, each of which specializes in the production of any one product, one service, and therefore, to meet social needs, it becomes necessary to buy and sell goods on the market. The commodity form can be divided into simple production (manual labor) and capitalist (machine labor).

Today, it is impossible to clearly distinguish between an absolutely natural or absolutely commodity economy, since usually part of the created material goods and services is consumed within the economic unit itself, and the other part goes to sale and purchase on the market.

There are certain commodity-money relations between the market and the household:

· Purchase by households from producers of goods and services;

· Sale by enterprises of goods and services to the population that were produced by the household;

· Sale by households, population of resources, factors of production - land, labor, capital to enterprises and firms;

Payment by enterprises and firms to the population, households, the corresponding income ( wages, profit, interest, etc.)

The household cannot relate entirely to the commodity or natural form, as well as to comply with all the conditions for the implementation of commodity-money relations.

The household can produce food for personal consumption as well as for sale. At the same time, it, as a subject of the market, uses personal labor. Although in some cases the household acquires special household appliances for the production of goods and services, or hires specialists in a particular production area. This will already be called wage labor within the household.

The household acts in the market not only as a buyer of consumer goods. He often acts as a supplier of resources to producers or to the market.

Thus, the household, as a market entity, is characterized by the fact that it makes a demand for consumer goods and supplies resources.

Consumer behavior theory

General and marginal utility.

The society consists of consumers who have the right to independently choose the product and the volume of purchase. He dictates his desires and preferences (freedom of consumer choice), which must be taken into account by the manufacturer. It happens that with the help of advertising, the consumer succumbs to suggestion and purchases unnecessary goods.

There are two main aspects of consumer behavior - their preferences and opportunities. The buyer wants, given the opportunities, to find a set of goods that would bring him maximum utility, the greatest satisfaction.

People consume goods and services because they have the property of being a source of pleasure (useful). The value of a commodity is determined not by the cost of labor for its production, but by the useful effect that it can bring to the consumer. Moreover, each additional unit of goods brings the consumer additional (marginal) utility, which is of a diminishing nature. That is, the greater the number of units of the consumed good, the less the marginal utility extracted from the consumption of each subsequent unit of this good. Also, three equal factors take part in the creation of utility - labor, capital and land.

Marginal utility is the amount of additional utility received from the increase in the amount of consumption of the good by an additional unit, all other things being equal.

Subject utility presupposes the rarity of the good, the limited amount of its stock. It depends on the nature of the consumption of goods. As a rule, a commodity producer does not incur costs if they are not justified by the goal, results, and usefulness of future goods. But at the same time, obtaining a result, achieving utility is unthinkable without costs.

Overall utility is like a rational option that most consumers strive for. It forms consumer balance. That is, by consuming a certain number of units of a commodity, a person receives a total utility, consisting of the sum of diminishing marginal utilities.

Thus, most consumers strive to maximize their overall utility.

By maximizing the difference between total and marginal utility, the consumer can benefit or save his resources, since a unit of goods purchased by a person will not be either marginal or general utility for him if the person does not purchase goods or services in large quantities. Consumer reactions are influenced by changes in income, so their choices can be unpredictable. It turns out that by maximizing the difference between total and marginal utility, he does not get satisfaction. And this will not be allowed by the manufacturer himself, who will try to lure the buyer with discounts, advertising and other means.

The consumer will not maximize the marginal utility, since according to the theory of consumer behavior, it can be assumed that he will look for the optimal solution in conditions of limited resources. And it is impossible to maximize both types of utility, since these concepts are not compatible.

To get the maximum utility from the consumption of a given set of goods for a limited period of time, each of them must be consumed in quantities such that the marginal utility of all consumed goods will be equal to the same value. Thus, the consumer strives to obtain the same (overall) utility from each product.

Perfect competition

This kind of competition exists in areas of activity where many manufacturers offer a homogeneous product, but none of them can influence the price of the product.

In the real economy, the market of perfect competition is practically never encountered. It represents the ideal structure that modern markets can only aspire to (the first statement is correct). Although, if we compare the point of view put forward in his textbook by V.M. Kozyrev "Foundations of Modern Economics", it can be assumed that such markets existed.

Due to the great shortcomings of this type of competition in the process of development of the market economic system, it gives way to imperfect competition. Even if the market is very similar to the relationship of perfect competition, then one of its main characteristic features is necessarily not observed or not fully fulfilled:

· A large number of sellers and buyers;

· The product sold is the same for all manufacturers, and the buyer can choose any seller of the product to make a purchase;

· The impossibility of control over the price and volume of purchase and sale creates conditions for constant fluctuations of these values ​​under the influence of changes in market conditions;

· All buyers and sellers have the same about the market and full information(nobody knows more);

· Complete freedom to "enter" and "exit" the market.

In a competitive marketplace, manufacturers strive to reduce production costs per unit to maximize profits. This creates the opportunity for price reductions, which increases the manufacturer's sales and revenues. So the price of the product of this manufacturer cannot be equal to his marginal income (the second statement is incorrect).

In economics, there is a method that allows you to quickly determine the nature of competition: this is the nature of the price reaction to changes in supply and demand. For the demand for the products of an individual firm in perfect competition, price is a given value. Neither the buyer nor the seller can influence its change, since if the seller asks for a higher price, then the buyers will go to his competitors. If he asks for a lower price, then he will not satisfy the entire demand (the share of his product on the market is not large). Thus, adaptation to the market in a perfectly competitive environment is expressed in the volume of sales and the volume of purchases.

A manufacturer sells its product at a pre-existing market price. The demand curve in perfect competition is perfectly elastic and horizontal. 3

(third statement is wrong)

Perfect competition is undoubtedly the most efficient of all market structures, since at all times competition will always give rise to the manufacturer's concern for his product. He will constantly change its components, its assortment, update, which is very important for the buyer, at the same time monitor his competitors, open new points, expand his business, attracting new specialists. The income of such a manufacturer will grow, surpassing the demand for his product or services.

Conclusion

Every person is essentially an economist. Throughout his life, he feels the limitedness of his resources, tries to fight this with the help of economy. He strives to maximize the benefits he needs, making rational economic choices as a result.

The market is a huge system constant interaction buyer and manufacturer. Any seller will always try to attract more consumers than their competitor by any known means. The manufacturer must take into account the wishes of the consumer and his capabilities.

New subjects and objects of commodity relations are constantly appearing in the market system. And some relationships that exist and change over time, such as the household, will not become a thing of the past, since it is one of the foundations of the economy.

Literature

1. Eletskiy N.D., Kornienko O.V. Economic theory. Rostov-on-Don, 2002.

2. Ilyin S.S., Marenkov N.L. Fundamentals of Economics. M., 2004.

3. Kozyrev V.M. Foundations of modern economics. M., 1999.

4. Modern economics, ed. Mamedova O.Yu., uch. allowance. Rostov-on-Don, 1998.

5. Economic theory, textbook ed. Belokrylova O.S. Rostov-on-Don, 2006.

A RATIONAL CHOICE

A RATIONAL CHOICE

(rational choice) Direction or approach to policy research considering the individual actor as the main unit of analysis and modeling policy, based on the assumption that individuals behave rationally, or exploring possible political implications rational behavior... Authors who take the positions of rational choice usually limit rationality to the framework of transition and constancy of choice. Individual choice is transitional in the event that someone, preferring A B, a B C, when choosing between A and V also prefers A... This choice is considered permanent if, finding himself in the same conditions with the same set of options, a person always makes the same choice. Rational choice is subdivided into public choice and social choice(social choice).

Politics. Dictionary... - M .: "INFRA-M", Publishing house "Ves Mir". D. Underhill, S. Barrett, P. Burnell, P. Burnham, et al. Osadchaya I.M.. 2001 .

Political science. Dictionary. - RSU... V.N. Konovalov. 2010.

See what "RATIONAL CHOICE" is in other dictionaries:

English. choice, rational; German Wahl, rationale. Czech vyber / volba raciondlni. According to the theory of decision-making, the choice of means that guarantee the achievement of the goal with minimal cost and minimal undesirable consequences. Antinazi. ... ... Encyclopedia of Sociology

- (from Lat. rationalis reasonable) comprehensible with the help of reason, reasonably substantiated, expedient, as opposed to the irrational as "superintelligent" or even "against the sensible"; originating from reason, realizing or existing ... ... Philosophical Encyclopedia

- (rationality) The premise of neoclassical economic theory, the essence of which is that the individual, making his choice, will compare all possible combinations of goods and give preference to more goods over less. This position is always ... Business glossary

choice of theory- CHOICE OF THEORY. The term "V. T." (English theory choice) was introduced into the philosophy of science to designate cognitive situations that arise during periods of change scientific paradigms and characterized by competition between successively replacing each ... ...

A RATIONAL CHOICE- English. choice, rational; German Wahl, rationale. Czech vyber / volba raciondlni. According to the theory of decision-making, the choice of means that guarantee the achievement of the goal with minimal cost and minimal undesirable consequences ... Explanatory Dictionary of Sociology

APPROACH, RATIONAL- the premise of neoclassical economic theory, the essence of which is that the individual, making his choice, will compare all possible combinations of goods and give preference to more goods over less ... Big Dictionary of Economics

RATIONAL CHOICE THEORY- (RATIONAL CHOICE THEORY) Rational choice theory, which has its origins in economics, is a rapidly developing branch of sociological theory, more accurately called an approach or paradigm ... ... Sociological Dictionary

rational choice theory- RATIONAL CHOICE THEORY The theory of a reasonable choice from a variety of possible, alternative methods of action or behavior, the choice of a solution that meets the optimal or most preferable conditions in a given situation. This theory ... ... Encyclopedia of Epistemology and Philosophy of Science

Viktor Vasnetsov. A Knight at a Crossroads. 1878 Decision theory is a field of study involving the concepts and methods of mathematics, statistics ... Wikipedia

VOTE- (VOTING) Sociological Analysis of Electoral Behavior The study of how people vote in elections and why they vote this way and not otherwise has traditionally been based on a structural approach aimed at identifying factors of social ... ... Sociological Dictionary

Books

• Microeconomics: A Very Brief Introduction, Dixit Avinash. Microeconomics (individual choice of where to live and work, how much to save, what to buy, the decision of firms, where to locate, who to hire, whom to fire, where to invest) ...
• Hip joint endoprostheses in Russia Construction philosophy Review of implants Rational choice, A. Nadeev, S. Ivannikov. The book proposes a philosophy of construction of implants used in hip joint replacement. A wide overview of implants of various systems and manufacturers is presented, ...

The main peak of the crisis of behaviorism, structural-functional analysis and other main methodological directions fell on the 60-70s. These years were full of attempts to find a new methodological basis for further research. Scientists have tried to do this in different ways:

to update the "classical" methodological approaches (the emergence of post-behavioral methodological directions, neo-institutionalism, etc.);

to create a system of theories of the "middle level" and try to use these theories as a methodological basis;

try to create the equivalent of a general theory by recourse to classical political theories;

turn to Marxism and create on the basis of this various kinds of technocratic theories.

These years are characterized by the emergence of a number of methodological theories claiming the place of the “big theory”. One of such theories, one of such methodological directions is the theory of rational choice.

The theory of rational choice was designed to overcome the shortcomings of behaviorism, structural-functional analysis and institutionalism, creating a theory of political behavior in which a person would act as an independent, active political actor, a theory that would allow looking at human behavior "from the inside", taking into account the nature of his attitudes, selection of optimal behavior, etc.

The theory of rational choice came to political science from economics. The "founding fathers" of the theory of rational choice are considered E. Downs (formulated the main provisions of the theory in his work "The Economic Theory of Democracy"), D. Black (introduced the concept of preferences into political science, described the mechanism of their translation into the results of activity), G. Simon (substantiated the concept of bounded rationality and demonstrated the applicability of the rational choice paradigm), as well as L. Chapley, M. Shubik, V. Riker, M. Olson, J. Buchanan, G. Tullock (developed "game theory"). It took about ten years before rational choice theory became widespread in political science.

The supporters of the theory of rational choice proceed from the following methodological premises:

First, methodological individualism, that is, the recognition that social and political structures, politics and society as a whole are secondary to the individual. It is the individual who produces institutions and relations through his activities. Therefore, the interests of the individual are determined by him, as well as the order of preferences.

Secondly, the egoism of the individual, that is, his desire to maximize his own benefit. This does not mean that a person will necessarily behave like an egoist, but even if he behaves like an altruist, then this method is most likely more beneficial for him than others. This applies not only to the behavior of an individual, but also to his behavior in a group when he is not bound by special personal attachments.

Supporters of the theory of rational choice believe that the voter decides whether to come to the polls or not, depending on how he evaluates the benefits of his vote, also votes on the basis of rational considerations of benefits. He can manipulate his political attitudes if he sees that he may not receive a gain. Political parties in elections also try to maximize their benefits by enlisting the support of as many voters as possible. Deputies form committees, guided by the need to pass this or that bill, their people to the government, etc. The bureaucracy in its activities is guided by the desire to increase its organization and its budget, etc.

Third, the rationality of individuals, that is, their ability to arrange their preferences in accordance with their maximum benefit. As E. Downes wrote, “every time we talk about rational behavior, we mean rational behavior, initially directed towards selfish goals” 12. In this case, the individual correlates the expected results and costs and, in an effort to maximize the result, tries to simultaneously minimize costs. Since the rationalization of behavior and the assessment of the ratio of benefits and costs requires the possession of significant information, and its receipt is associated with an increase in overall costs, then they speak of the "bounded rationality" of the individual. This limited rationality has more to do with the decision-making procedure itself than with the essence of the decision itself.

Fourth, the exchange of activities. Individuals in society do not act alone; there is an interdependence of people's choices. The behavior of each individual is carried out under certain institutional conditions, that is, under the influence of the actions of institutions. These institutional conditions themselves are created by people, but the starting point is the consent of people to exchange activities. In the process of activity, individuals rather do not adapt to institutions, but try to change them in accordance with their interests. Institutions, in turn, can change the order of preferences, but this only means that the changed order turned out to be beneficial for political actors under the given conditions.

Most often, the political process within the framework of the rational choice paradigm is described in the form of public choice theory, or in the form of game theory.

Proponents of the theory of public choice proceed from the fact that in a group, the individual behaves selfishly and rationally. He will not volunteer to make special efforts to achieve common goals, but will try to use public goods for free (the phenomenon of a "hare" in public transport). This happens because the nature of collective goods includes such characteristics as non-exclusion (that is, no one can be excluded from the use of public goods) and non-competitiveness (consumption of this good by a large number of people does not lead to a decrease in its usefulness).

Game theorists assume that the political struggle to win, as well as the assumptions of rational choice theory about the universality of such qualities of political actors as selfishness and rationality, make the political process similar to a game with zero or non-zero sum. As is known from the course of general political science, game theory describes the interaction of actors through a certain set of game scenarios. The purpose of such an analysis is to find such conditions of the game under which the participants choose certain strategies of behavior, for example, beneficial to all participants at once 13.

This methodological approach is not free from some disadvantages... One of these shortcomings is insufficient consideration of social and cultural-historical factors that influence the behavior of an individual. Authors of this study guide are far from agreeing with researchers who believe that the political behavior of an individual is largely a function of the social structure, or with those who argue that the political behavior of actors is incomparable in principle, because it occurs within the framework of unique national conditions, etc. However, it is obvious that the model of rational choice does not take into account the influence of the sociocultural environment on the preferences, motivation and strategy of behavior of political actors, and does not take into account the influence of the specifics of political discourse.

Another flaw is associated with the admission of rational choice theorists about the rationality of behavior. The point is not only that individuals can behave like altruists, and not only that they can have limited information, imperfect qualities. These nuances, as shown above, are explained by the theory of rational choice itself. The point is, first of all, that people often act irrationally under the influence of short-term factors, under the influence of affect, guided, for example, by momentary impulses.

As D. Easton rightly notes, the broad interpretation of rationality proposed by the supporters of the theory under consideration leads to the erosion of this concept. It would be more fruitful for solving the problems posed by representatives of the theory of rational choice, it would be to highlight the types of political behavior depending on its motivation. In particular, “socially oriented” in the interests of “social solidarity” 14 differs significantly from rational and egoistic behavior.

In addition, rational choice theory is often criticized for some technical contradictions arising from the main provisions, as well as for the limited explanatory possibilities (for example, the applicability of the model of party competition proposed by its supporters only to countries with a two-party system). However, a significant part of such criticism either stems from the incorrect presentation of the works of representatives of this theory, or is refuted by the representatives of the theory of rational choice (for example, using the concept of "bounded" rationality).

Despite the noted shortcomings, the theory of rational choice has a number of merits, which determine its great popularity. The first undoubted advantage is that it uses standard scientific research methods. The analyst formulates hypotheses or theorems based on general theory. The analytical method used by supporters of rational choice theory proposes the construction of theorems that include alternative hypotheses about the intentions of political actors. The researcher then subjects these hypotheses or theorems to empirical testing. If reality does not refute the theorem, that theorem or hypothesis is considered relevant. If the test results are unsuccessful, the investigator draws appropriate conclusions and repeats the procedure again. The use of this technique allows the researcher to conclude which human actions, institutional structures and the results of the exchange of activities will be most likely under certain conditions. Thus, the theory of rational choice solves the problem of verification of theoretical positions by testing the assumptions of scientists about the intentions of political actors.

As the well-known political scientist K. von Boume rightly notes, the success of the theory of rational choice in political science can be generally explained by the following reasons:

“Neo-positivist requirements for the use of deductive methods in political science are most easily met with the help of formal models on which this methodological approach is based

the approach from the standpoint of the theory of rational choice can be applied in the analysis of any type of behavior - from the actions of the most selfish rationalist to the infinitely altruistic activities of Mother Teresa, who maximized the strategy of helping the disadvantaged

areas of political science, which are at the middle level between micro- and macrotheories, are forced to recognize the possibility of an approach based on the analysis of activities ( political actors- E.M., O.T.) actors. The actor in the concept of rational choice is a construction that avoids the question of the real unity of the individual

rational choice theory promotes the use of qualitative and compulsive ( mixed - E.M., O.T.) approaches in political science

the rational choice approach acted as a kind of counterbalance to the dominance of behavioral research in previous decades. It is easy to combine it with multilevel analysis (especially when studying the realities of the countries of the European Union) and with ... neoinstitutionalism, which became widespread in the 80s ”15.

Rational choice theory has a fairly wide range of applications. It is used to analyze voter behavior, parliamentary activity and coalition formation, international relations, etc., and is widely used in modeling political processes.