PSYCHOLOGY OF EMOTIONS

Detailed explanation-1: -Preferences denote the positive or negative evaluations individuals attach to possible outcomes of their actions. Preferences can have many roots, ranging from culturally transmitted tastes for food or other items to personal habits and commitments.

Detailed explanation-2: -Rational choice theory expresses that individuals are in control of their decisions. They don’t make choices because of unconscious drives, tradition or environmental influences. They use rational considerations to weigh consequences and potential benefits.

Detailed explanation-3: -The theory assumes that individuals act in their rational self-interest, have sufficient information to make rational calculations, and pursue preferences that are transitive in nature.

Detailed explanation-4: -For example, while it is likely more financially beneficial for an executive to stay on at a company rather than retire early, it is still considered rational behavior for her to seek an early retirement if she feels the benefits of retired life outweigh the utility from the paycheck she receives.