Rational Choice Theory is a way of looking at deliberations between a number of potential courses of action, in which "rationality" of one form or another is used either to decide which course of action would be the best to take, or to predict which course of action actually will be taken. Such a perspective finds itself in models for both human behavior and behavior of non-human but nonetheless potentially rational entities, such as corporations.

Obviously, what is taken as "rational" is of chief importance here. Usually, "rational" is defined in a formal, mathematical way, along the lines of Game theory; this often means making a choice is taken to be equivalent to solving a mathematical optimization problem.

Often, to simplify calculation and ease prediction, some rather unrealistic assumptions are made about the world. These can include:

An individual has precise information about exactly what will occur under any choice made. (Alternatively, an individual has a reliable probability distribution describing what will happen under any choice made.)
An individual has time and ability to weigh every choice against every other choice
An individual is fully aware of all possible choices

Assumptions such as these have sparked criticism from a number of camps. Some people have tried to create models of Bounded rationality, which try to be more psychologically plausible without giving up completely on the idea that some kind of reason underlies decision-making processes.

Why rational choice theory?

One question that can be asked is why people try to base their models on concepts such as "reason", "preferences", and what is implied by them, free will. Some potential reasons:

They see people as "rational" beings, and thus believe that a model in which they are represented as such should be reasonably accurate
Assumptions of rationality have useful formal properties