Rational Behavior

Rational behavior is a behavior of an individual pr a business entity in which the individual or an entity act or perform in such a way that it will result beneficial for the individual or entity. In rational behavior the individual or business entity includes the making of the choices that will prove beneficial and will result in full utility in terms of benefits. Most of the accounting and economic theories that involve calculation of profit and loss are based on the assumption that all the individuals and business entities are behaving rationally. These theories assume that all the actions and activities of the participants are rational.

It is not like the thing that benefits and profitability is always involved with the rational behavior. Entities behaving rationally are not always at the receiving end of the profit and the benefits in terms of money and finance. Sometimes the entities behaving rationally experience monetary loss however they have a self satisfaction that they are behaving ideally and are receiving emotional satisfaction instead of receiving monetary gain.

For example there are a number of different examples of rational behavior such as an individual who plans to get retirement early just to enjoy relax and peaceful retirement life rather than going for the everyday quest of money and responsibilities in the office. In order to enjoy the fun of retirement life the individual may say no to the job even if the job is not expire yet and retirement is not approached yet.

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