Rationalization

January 4, 2010

Rationalization in economics is an attempt that is made to change the adhoc workflow that is preexisting in to the one based on a set of rules that are published. Rationalization can also be defined as the organization of life through coordination and division of activities on the basis human beings relationships with one another along with their environment and tools in order to achieve greater productivity and efficiency.


The process of rationalization is the application of knowledge in a practical manner to get desired results. The purpose of rationalization is to bring coordination, efficiency and control of social and natural environment. Rationalization is a product with the blend of technical differentiation and scientific specialization. It is the guiding principle between division of labor and bureaucracy leading to increase in production and distribution of services and goods.

Rationalization in corporate terms means reorganization of the company in its quest to improve and increase efficiency. The reorganization may result in the reduction or expansion of the size of the company, changes in policies and alteration in strategies related to company’s products. It is a process where one can witness increase in number of social actions and interactions that become teleological efficiency for calculation. Even during rationalization people always don’t go by their favorite option.

Rationalization in Decision Making

This is because even though people have their preferences of their favorite choices they cannot select one of them because they have to undergo the process of rationalization of choices before making the final decision. Most of you think that people eat chocolates because they like eating chocolates. If you are one of them then you may think it is right because chocolates have antioxidants and boosts your mood. This reasoning may be true but you are not entirely right.

You just like many other people try to rationalize your line of thinking so that you satisfy your ego and desire and also feel less guilty about eating chocolates that have ingredients that have high fat and sugar content. Some of the other reasons for rationalizations are as follows. The basic principle of constrained optimization states that individuals seek to derive greatest possible benefit under the given constraints, limitations and demands of the situation.

Rationalization actually means that people are normally constrained optimizers and their main constrained optimizer is to satisfy their psyche with the help of a rationale. The constraints are the way of choosing the preference. Many people try to quell and suppress their anxiety when they feel that they can’t do what they want and desire by being looking to be rationale. Defense mechanisms explain the rationale in day-to-day life.


People through their actions like to display a picture of rationale person by trying every bit of logical, connected and continuous account of him or herself through actions; conduct and opinions with all mental processes are manipulated unconsciously. People cannot make any decisions without being rationale. So the people always take decisions and select a product after undergoing a rational process.

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Written by Uncle Sam · Filed Under Economics 

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