what is the state-dependent preferences and rational expectations model?

The state-dependent preferences and rational expectations model is a microeconomic model of decision-making where individuals evaluate the costs and benefits associated with different options and make decisions based on their expectations of the future. It is based on the assumption of rational expectations - that individuals can correctly anticipate changes in the future state of the economy and make decisions accordingly. This model has been used to explain economic phenomena such as the rebound effect and the business cycle.