Definition ∞ Rational agent theory posits that individuals or entities make decisions to maximize their own utility or expected outcomes based on available information. This economic principle assumes agents act logically and consistently to achieve their objectives. In cryptocurrency markets, this theory helps to analyze participant behavior, such as trading strategies or protocol participation. It provides a framework for understanding market dynamics and incentives within decentralized systems.
Context ∞ The discussion surrounding rational agent theory in crypto often examines the economic incentives designed into blockchain protocols to ensure network security and participant cooperation. A key debate involves how real-world behavioral biases deviate from purely rational models. Future research continues to refine these models, incorporating psychological factors to better predict market movements and protocol stability.
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