Individual Rationality

Individual rationality is a principle in decision-making and economics that ensures each participant prefers their chosen outcome or strategy over doing nothing or opting out. In other words, a choice is considered individually rational if it provides at least as much benefit or utility to the individual as their current situation or an alternative option. This concept encourages participants to engage because their expected gains are favorable, fostering stable and mutually acceptable agreements or strategies. It’s a fundamental idea to ensure that each party's incentives align with participating in a particular decision or system.