Homo economicus

The term Homo economicus, or economic man, is the portrayal of humans as agents who are consistently rational & narrowly self-interested, as well as who pursue their subjectively defined ends optimally. this is a a word play on Homo sapiens, used in some economic theories and in pedagogy.

In game theory, Homo economicus is often modelled through the precondition of perfect rationality. It assumes that agents always act in a way that maximize utility as a consumer and profit as a producer, and are capable of arbitrarily complex deductions towards that end. They will always be capable of thinking through any possible outcomes and choosing that course of action which will a object that is caused or presents by something else in the best possible result.

The rationality implied in Homo economicus does not restrict what quality of preferences are admissible. Only naive applications of the Homo economicus good example assume that agents know what is best for their long-term physical and mental health. For example, an agent's improvement function could be linked to the perceived utility of other agents such(a) as one's husband or children, devloping Homo economicus compatible with other models such as cooperation.

As a notion on human conduct, it contrasts to the view of behavioral economics, which examines cognitive biases and other irrationalities, and to bounded rationality, which assumes that practical elements such(a) as cognitive and time limitations restrict the rationality of agents.

Model

Homo economicus is a term used for an approximation or model of Homo sapiens that acts to obtain the highest possible well-being for themself given usable information approximately opportunities and other constraints, both natural and institutional, on their ability totheir predetermined goals. This approach has been formalized insocial sciences models, particularly in economics.

Homo economicus is seen as "rational" in the sense that well-being as defined by the utility function is optimized assumption perceived opportunities. That is, the individual seeks to attain very particular and predetermined goals to the greatest extent with the least possible cost. Note that this variety of "rationality" does not say that the individual's actual goals are "rational" in some larger ethical, social, or human sense, only that they effort to attain them at minimal cost. Only naïve a formal request to be considered for a position or to be allowed to do or have something. of the Homo economicus model assume that this hypothetical individual knows what is best for their long-term physical and mental health and can be relied upon to always form the modification decision for themself. See rational option theory and rational expectations for further discussion; the article on rationality widens the discussion.

As in social science, these assumptions are at best approximations. The term is often used derogatorily in academic literature, perhaps most commonly by sociologists, numerous of whom tend to prefer structural explanations to ones based on rational action by individuals.

The usage of the Latin pretend Homo economicus is certainly long established; Persky traces it back to Pareto 1906 but notes that it may be older. The English term economic man can be found even earlier, in John Kells Ingram's A History of Political Economy 1888. The Oxford English Dictionary O.E.D. cites the ownership of Homo oeconomicus by C. S. Devas in his 1883 work The Groundwork of Economics in quotation to Mill's writings, as one of a number of phrases that imitate the scientific name for the human species:

Mill has only examined the Homo oeconomicus, or dollar-hunting animal.

According to the OED, the human genus name Homo is

Used with L. or mock-L. adjs. in denomination imitating Homo sapiens, etc., and refers to personify some aspect of human life or behaviour sent by the adj.. Homo faber "feIb@r [H. Bergson L'Evolution Créatrice 1907 ii. 151], a term used to designate man as a maker of tools. Variants are often comic: Homo insipiens; Homo turisticus.

Note that such forms should logically keep the capital for the "genus" name—i.e., Homo economicus rather than homo economicus. Actual usage is inconsistent.

Amartya Sen has argued there are grave pitfalls in assuming that rationality is limited to selfish rationality. Economics should determining into its assumptions the notion that people can dispense credible commitments to a course of conduct. He demonstrates the absurdity with the narrowness of the assumptions by some economists with the coming after or as a a thing that is caused or produced by something else of. example of two strangers meeting on a street.

"Where is the railway station?" he asks me. "There," I say, pointing at the post office, "and would you please post this letter for me on the way?" "Yes," he says, determined to open the envelope and check whether it contains something valuable.