Rationality assumption
The assumption of rationality assumes the actors in microeconomic models make rational, goal-oriented decision-making in the sense that they maximize a target function while taking into account given restrictions . In traditional household theory , the restriction is the budget restriction. More modern approaches that interpret consumption as an activity also allow other restrictions to be taken into account, such as B. the time restriction. A utility function of the households is assumed as the target function , which represents the preferences .
In the theory of the enterprise, the production function is assumed as the restriction and the profit function as the objective function.