Rational choice theory is a concept that assumes people make rational choices which align to their own self-interest. Each individual is said to weigh up the cost and benefits and come to a rational choice.
Groupthink is the tendency for individuals to agree with each other in a group setting in order to conform and keep harmony. This can contribute to inefficient decision making as ideas and thoughts go unchallenged in favour of cohesion.
The Hawthorne Effect occurs when individuals adjust their behaviour as a result of being watched or observed. For instance, employees may work harder and more diligently knowing their manager is closely watching, or children behave better because they are being watched by their parents.
Game theory is the study of strategic decision making between individuals. Although termed ‘game theory’, it refers to any interaction between multiple people where each person’s pay off is affected by the decision made by others.