1 Making choices on the basis of preferences. In this sense a consumer is rational if he always chooses the feasible alternative that he most prefers. The choice of an alternative that is not the best is irrational.
2 Possessing preferences that satisfy a set of axioms. Let ≿ represent the statement ‘at least as good as’. The standard axioms of consumer theory for choice under certainty are: 1. Completeness: for any two alternatives x and y either x ≿ y or y ≿ x; 2. Reflexivity: x ≿ x for any alternative x; and 3. Transitivity: for any three alternatives x, y, and z, if x ≿ y and y ≿ z then x ≿ z. If a consumer's preferences satisfy these axioms he can be described as rational. This is not the only set of possible axioms, so ‘rationality’ in this sense is not uniquely defined.
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