Answer to Question #253071 in Microeconomics for rudy

Question

Considering that there are more than 2 individuals in this world including Bruce, the Almighty asked Bruce to choose amongst the following states of the world - one, where Bruce is the only person who is better off by 100 units, while everyone in the world is worse off and are getting an allocation of 10 (call this state of the world as ‘self-interest’); two, where everyone in the world is better off and each one of the individual is getting 100, except Bruce who has been made worse-off and is getting an allocation of 10 (call this state of the world as ‘philanthropy’). Bruce chose latter over former. Comment over the entire situation that Bruce is facing. Also, comment over Bruce’s choice and giver reasons explaining the rationale behind that choice.

Answer 1

Solution:

Bruce was in a situation where he had to decide which option was best for him. Individuals engage in behavior based on their desire to create or receive a specific outcome. Individuals are thus rational actors who choose to act in their own best interests. 

Bruce did not choose the second option, where he was worse off than the rest of the people, based on logic. Acting rationally entails acting in order to achieve one's goals in light of one's beliefs. One way to act rationally is to be sensible and reason logically before acting on one's conclusions, that is, to prioritize one's own interests in the decision-making process.