In reference to economics, rational agent refers to hypothetical consumers and how they make decisions in a
free market. This concept is one of the assumptions made in
neoclassical economic theory. The concept of economic
rationality arises from a tradition of
marginal analysis used in neoclassical economics. The idea of a rational agent is important to the philosophy of
utilitarianism, as detailed by philosopher
Jeremy Bentham's theory of the
felicific calculus, also known as the hedonistic calculus. The action a rational agent takes depends on: • the preferences of the agent • the agent's information of its environment, which may come from past experiences • the actions, duties and obligations available to the agent • the estimated or actual benefits and the chances of success of the actions. In
game theory and classical
economics, it is often assumed that the
actors, people, and firms are rational. However, the extent to which people and firms behave rationally is subject to debate. Economists often assume the models of
rational choice theory and
bounded rationality to formalize and predict the behavior of individuals and firms. Rational agents sometimes behave in manners that are counter-intuitive to many people, as in the
traveler's dilemma.
Alternate theories Neuroeconomics is a concept that uses
neuroscience, social
psychology and other fields of science to better understand how people make decisions. Unlike rational agent theory,
neuroeconomics does not attempt to predict large-scale human behavior but rather how individuals make decisions in case-by-case scenarios. ==Artificial intelligence==