Coined by sociological theorist Max Weber, Formal Rationality is a sociological concept with applications in economics and market analysis. Formal rationality refers to the idea that people in modern-day society are best attuned to using a matter of fact, or rational, approach to decision making. Weber primarily drew upon formal rationality to understand organizations at a systemic, bureaucratic level. Formal rationality is one of four concepts of rationality as identified by Weber, the other three being practical, theoretical, and substantive.