economic man


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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.
Economic manclick for a larger image
Fig. 53 Economic man. The graph demonstrates why, if the assumption of rational consumer behaviour holds, a consumer's INDIFFERENCE CURVES cannot cross. Indifference curves II and I1 I1, show a consumer's preference between two products, X and Y. Point A on indifference curve II represents a higher level of satisfaction to the consumer than point B on indifference curve I1 I1 because point A represents more of both products than point B. Yet point C lies on both curves. This suggest that the consumer, having preferred the combination of goods indicated by point A to the combination represented by point B, now regards them as equal at point C. If the consumer is rational, such an inconsistent or intransitive set of preferences would not arise -hence indifference curves do not intersect.

economic man

an assumption in economic theory that individuals act rationally in specifying their objectives and then take decisions that are consistent with those objectives. Thus, the ENTREPRENEUR will set a goal of PROFIT MAXIMIZATION and will adjust his output and price to achieve this goal. Again, the CONSUMER will seek to maximize his UTILITY or satisfaction and will determine his purchases in the light of his tastes for products and the relative prices of those products. See Fig. 53 for an illustration of rational consumer choice. See CONSUMER RATIONALITY, CONSUMER EQUILIBRIUM, BEHAVIOURAL THEORY OF THE FIRM.
References in periodicals archive ?
Mintzberg, Simons, and Basu (2002) named the obsession with self-interest the syndrome of selfishness and explain that this obsession was greatly reinforced by the model of the economic man developed by Jensen and Meckling (1994) and labeled the Resourceful, Evaluative, Maximizing Model (REMM).
The fundamental problem is that Marcal has created a straw economic man out of Adam Smith.
If the birth of 'economic man' can be traced to the 'European Enlightenment' (p3), why not push further back?
"Economic Man in the Classroom." Journal of Political Economy, 80(5): 1069-73.
substantive rationality of economic man. (133) However, we often must
On abstracting, is it rational to rely so completely on rational and self-serving economic man, and are values or ideology hidden within the rational structure of economic theory?
Fortunately, some economists have sought to quantify and challenge a narrow version of "economic man" through the study of behavior.
Myers, The Soul of Modern Economic Man: Ideas of SelfInterest, Thomas Hobbes to Adam Smith (Chicago: University of Chicago Press, 1983).
Modern finance tells us this is achieved by the theory and actions of the "economic man", a rational investor operating in efficient markets.
He suggested that international development efforts were hindered by prevalent conceptions of human nature that, for example, reduced human beings to an "economic man" that "pursues his self-interests in a rational, calculated, and self-maximizing manner within an arena of competition over scarce resources."
Two gender papers review feminist criticisms of the mainstream concept of the rational economic man and the history of feminist engagement with social reproduction.
Herbert Simon (1955, 1957, 1958, 1960, 1963, 1972, 1976, 1979) made it clear that this schematized model of rationality and the economic man is divorced from reality.