behavioral economics Behavioral economics is the study of the psychological (e.g. cognitive, behavioral, affective, social) factors involved in the decisions of individuals or institutions, and how these decisions deviate from those implied by traditional economi ...

, the behavioral assumption is that, under their resource constraints, humans are rational actors – they will attempt to maximize their utilities, thereby generating the greatest

profit Profit may refer to: Business and law * Profit (accounting), the difference between the purchase price and the costs of bringing to market * Profit (economics), normal profit and economic profit * Profit (real property), a nonpossessory inter ...

and outcomes. The two most important characteristics of the human under the behavioral assumption are

rationality Rationality is the quality of being guided by or based on reason. In this regard, a person acts rationally if they have a good reason for what they do, or a belief is rational if it is based on strong evidence. This quality can apply to an ab ...

and

self-interest Self-interest generally refers to a focus on the needs or desires (''interests'') of one's self. Most times, actions that display self-interest are often performed without conscious knowing. A number of philosophical, psychological, and economi ...

References

Finance theories {{Finance-stub