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.
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References in periodicals archive ?
There exists a continuum of rational investors of size one, who are risk neutral and have a discount rate equal to zero.
It postulates that rational investors will pay no more for an investment in the subject business than they would have to pay for a similar investment, if available.
Jin, "BSV investors versus rational investors: an agent-based computational finance model," International Journal of Information Technology & Decision Making, vol.
In terms of age , education level and income, rational investors are found among the age group of 26-45 years with high percentage of individuals being post graduate (nearly 24 percent) and earning above 40000 p.m.
Yes, some of that fall resulted from rational investors adjusting their estimates of business growth.
Perhaps the elite corps of rational investors cancel the effects of their irrational brethren by exploiting the latter's mistakes?
For readers with a good grasp of undergraduate-level calculus, Ma (Fudan U., 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. He introduces several new theoretical models, and hopes to stimulate further research as well as teach the conventional methods.
"Such strong statements," Harvard economist Andrei Shleifer later wrote, "portend reversals, and the EMH is no exception." That reversal has come in the form of "behavioral economics," which challenges EMH and its view of rational investors by using insights from fields such as psychology to better understand how and why actual people -- even professional investors -- make decisions.
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.
This approach explores the distinction between rational expectations and rational investors. In a rational expectations environment, rational investors make statistically optimal decisions in a world in which they possess all relevant structural information.