A fundamental axiom of rational choice theory is
A)Choices should be independent of relevant alternatives
B)Choices should be independent of irrelevant alternatives
C)Consumers should be risk-neutral
D)Consumers should disregard recent performance data

Question

Quizplus · Accepted Answer

Rational choice theory assumes that individuals make decisions based on the available information and preferences. However, to make a rational choice, individuals should be able to ignore irrelevant alternatives. In other words, the choices should be made on the basis of relevant alternatives only. Therefore, option B is the correct answer.

A Fundamental Axiom of Rational Choice Theory Is