In the context of traditional finance, what does perfect self-interest mean?

In traditional finance, the concept of perfect self-interest refers to the idea that individuals act solely in their own best interest, seeking to maximize their personal utility or wealth. This assumption underlies many economic and financial theories, where individuals are considered rational agents who evaluate the consequences of their decisions primarily based on how those decisions will benefit themselves.

This perspective assumes a level of selfishness in human behavior, where people prioritize their own financial gains above any altruistic considerations or community interest. Rational decision-making based on perfect self-interest is fundamental to models such as the Efficient Market Hypothesis and the notion of utility maximization in consumer behavior.

Given this context, the correct answer aligns with the core premise that individuals are driven by their personal interests, which is pivotal in understanding financial markets and economic theories in traditional finance.