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doctrines, etc., are analysed by using what is usually called the economic method.
One of the central elements of the economic method is that individuals are assumed
to be rational, i.e. purposive. It is also generally assumed that individuals are
self-regarding. The notions of rationality and self-regardingness are independent
of each other; rationality per se does not imply self-regardingness and neither
does the implication hold the other way round. One can be purposive without
being solely concerned with one’s own welfare; and one can be quite self-centric
without exhibiting a high degree of rationality. Rationality postulate consists of
assuming that individuals have well-defined preferences over the set of alternatives
or outcomes and that they act in accordance with their preferences. The postulate
of self-regardingness of individuals consists of assuming that in judging different
alternatives individuals take account of only those aspects of the alternatives that
concern them. For instance, in the theory of consumer behaviour, it is assumed
that the consumer can rank all possible consumption bundles and that in any
given situation he1will choose a bundle best among all feasible bundles. In
evaluating different allocations of goods, a consumer is assumed to take into
account only what he would obtain under them and not what others would
obtain.
Economic Analysis of Liability Rules (2015).pdf
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