Rational choice theory (RCT) in sociology draws on the tradition of utilitarian philosophy, and insights from the field of economics. While the central elements of RCT found expression in some earlier sociological accounts (most notably exchange theory), the formal development of RCT in sociology came only recently. Sociologists tend to explain human behavior as patterned outcomes of macro-level causes (culture and social structure) that have an impact on individual and groups. In contrast, RCT focuses on the intentional, goal-oriented behavior of individual actors. Social interaction, and the development of cultural systems and social structure, reflect the outcome of the purposive pursuit of individual self-interest.
The methodological individualism of RCT clearly sets it apart from traditional sociological accounts. Rational choice theorists maintain that the starting point for explanations of macro-level structures and group behavior is determined by the behavior of the core element of such systems, the individual actor. Individuals, including the corporate actor, are characterized as rational actors who choose actions designed to maximize their own individual interests—the satisfaction of their needs and wants:
1. Actors calculate the benefits (utility) of expected outcomes resulting from particular activities and interactions.
2. Actors take into account the expected costs of particular behaviors and include in these calculations the variable utility related to alternative courses of action (opportunity costs).
3. Actors engage in actions they expect to maximize their own interests.
Recognizing that other factors (cultural norms and values as well as the structure of the existing social context) also influence decision-making, RCT stipulates that individuals nonetheless employ a utilitarian strategy designed to insure their access to and control over desired resources (material and nonmaterial). RCT offers an explanation of how macro-level structures emerge from the micro-level, purposive activity of individuals.
Social exchange theory (Homans 1961) represents an early approach that incorporated this image of the rational actor. Whereas George Homans’s approach rests on a behaviorist conception of the individual actor motivated by rewards and punishments, contemporary RCT (Coleman 1990) simply argues that individuals act as if they are rational, and that human rationality needs no further explanation. RCT is not concerned with how actors define utility, or what particular objectives they seek to acquire; rather, the focus is simply on the fact that actions are chosen to achieve such ends efficiently.
RCT characterizes social interaction as social exchange. Individuals enter into interaction with others when the potential rewards (tangible and intangible) outweigh the calculated costs. Although it is not always possible for individuals to satisfy all their needs, they will choose alternatives they think lead to the greatest maximization of their individual interests within the constraints of particular situations. Sustained interaction, and the emergence of social structure, depends on the recognition, from the perspective of each individual involved, of the ongoing effort to achieve fulfillment of individual self-interest (Homans 1961).
Within a social context, a variety of factors affect the calculation of individual utility. The scarcity of available resources and differential access to those resources can limit opportunities for specific actors. Individuals who possess scarce resources can use them to further their own interests. Differential control of available resources produces differentials in power, allows for control over the exchange process, and opens up the potential for exploitation. Individual actors also vary in their relative dependence on the utility associated with expected outcomes, and the costs involved in pursuing particular actions versus others (opportunity costs) require consideration as well. The rational actor does not choose one goal over another because of its overall value, but due to the distribution of resources related to achieving that goal, the feasibility of success in obtaining the goal, the relative costs of any exchange involved in pursuit of the goal, and the variable value (objective and subjective) assigned to alternative strategies and their related rewards (Ritzer and Goodman 2004).
The development of sustained interaction and the emergence of a social system present certain problems for RCT:
1. If all actions are based on self-interest, why do individuals cooperate? (The so-called free-rider problem.)
2. What are the roles of institutionalized norms and sanctions, as well as values, that may both limit particular courses of action and encourage others (and how do these elements develop)?
Two types of collective interaction are involved— structured and unstructured. For organized, structured groups and organizations, participation by the rational actor is based on the costs involved in participation versus relative benefits accrued. The structuring of the context is important, with "selective incentives" altering the rewards/cost equation (Olson 1965; Hechter 1987). An actor may calculate that the relative costs of an exchange are outweighed by the potential benefits of sustained cooperation; however, such calculations are oftentimes based on unequal distribution of desired resources. Control of desired resources provides an individual or corporate actor the power to force (or legitimate) the surrendering of individual control and decision-making from one actor to others. Whether voluntary or not, the surrendering of authority and rights possessed by one individual to another produces a relatively stable, independent social structure and a redirection of purposive behavior based on both reciprocity and restraint (Scott 2000). Unstructured (collective) behavior emerges when individual maximization of utility becomes defined in terms of unilateral (nonreciprocal) transfer of control to the collective. As the individual cedes authority to a collective based on the recognition that individual success is only served through collective action, a dynamic character to social action ensues, resulting in the potential for disorder or change (Coleman 1990; Ritzer and Goodman 2004).
As collective interaction persists, a normative system is established, supporting the interests of actors with control over scarce resources, and the mutual interests of actors who recognize the utility of cooperative engagement. James Coleman (1990) maintains that norms are created and enforced by people who see benefits resulting from obedience, and harm or costs associated with violation. Norms allow the individual to transfer partial control within a shared system of rules, and relative maximization of utility is achieved by gaining partial control over the behavior of others. Normative structures legitimate the authority of particular collective actors based on their control over desired resources, or represent actors’ trust or anticipated long-term reciprocity (Blau 1964; Scott 2000).
Although criticized for its reductionist approach, for ignoring the role of cultural values and subjective meaning in individual and group behavior, and for an overreliance on the idea of the rationality of the human actor,RCT retains support among sociologists. Advocates claim that RCT provides an integrated theoretical analysis that bridges the differences across disciplines in the social sciences.