Homo Economicus

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Homo Economicus

A person that desires to maximize his/her needs or desires. Homo economicus is used most of the time to refer to the rational economic actor, who desires wealth, does not desire to work if it can be avoided, and is able to find ways achieve those ends. This assumption is accepted by many economists, especially those who follow rational choice theory, but it remains controversial. The concept of homo economicus was developed by utilitarian thinkers, and contrasts with the constructs of behavioral economics.
References in periodicals archive ?
There may have been opportunities, but there was still too much uncertainty and instability for rational investors to even consider undertaking any projects.
Hansen developed a statistical method that is well suited to testing theories of how rational investors respond to uncertainty in asset prices.
In particular, it says that when the price-to-dividend ratio is high, rational investors should expect a relatively low rate of return on the asset.
Investors belonging to this group are rational investors who agree to statements "I read business section of newspaper attentively", "I like to join conversations about financial matters", "I am anxious about financial and money affairs", "After making a decision, I am anxious whether I was right or wrong", "I compare and calculate risks".
Yes, some of that fall resulted from rational investors adjusting their estimates of business growth.
China) explains how investors make choices on portfolio holdings among a bunch of tradable securities, how they revise their investment decisions within a given time frame when new information arrives, and how security price is determined in an ideal frictionless economy with rational investors.
We assume that rational investors choose portfolios that maximize their utility of consumption.
Rational investors will completely understand that specific ground rules for this kind of constructive engagement with board member-insiders must be established in advance, and adhered to during discussions.
Investors who are overconfident, who also make their decisions based on private and public information but who place more importance on their private information than rational investors do.
That people frequently do not behave like rational investors is not trivial.
As much as finance professors talk about rational investors and efficient markets, it's emotions--hope, fear, and greed--that drive day-to-day market action.
In two recent papers, with Tuomo Vuolteenaho and with Christopher Polk and Vuolteenaho, I have argued that long-term rational investors who hold an equity portfolio may perceive value stocks as relatively risky despite their low market betas.