Oct. 13, 2006. Alan Krueger. Elements of Rational Decision Making. Individuals make choices to maximize some objective function (usually utility function) under the constraints that they faceUtility function is stableIf there is uncertainty, individuals maximize expected utility by assigning probabilities to different states of the worldImplications: Compare opportunity cost of various decisionsPursue an activity until marginal benefit equals marginal costSunk costs are sunkConsistent b9448
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