Homo economicus

Homo economicus is the concept in many economic theories portraying humans as consistently rational and narrowly self-interested agents who usually pursue their subjectively-defined ends optimally. Generally, homo economicus attempts to maximize utility as a consumer and profit as a producer. This theory stands in contrast to the concepts of behavioral economics (which examines actual economic behavior, including widespread cognitive biases and other irrationalities), and homo reciprocans (which emphasizes human cooperation).

The models which uses homo economicus assumption are based mainly in:

• Utility function: the possibility to assign a utility function which give us the payoffs information consequence of each possible actions.
• Agent: which only tries to optimize the utility function.

The homo economicus assumptions have been criticized not only by economists on the basis of logical arguments, but also on empirical grounds by cross-cultural comparison

Another weakness is highlighted by economic sociologists and anthropologists, who argue that homo economicus ignores an extremely important question, i.e. the origins of tastes and the parameters of the utility function by social influences, training, education, and the like. The exogeneity of tastes (preferences) in this model is the major distinction from homo sociologicus, in which tastes are taken as partially or even totally determined by the societal environment (see below).

Homo economicus assumption only consider the material incentives but not the moral or social ones.

Another related homo assumption is the Homo biologicus assumption.

See also

Neuroeconomics

Papers

• O’Boyle, E. J. (2007). Requiem for homo economicus. Journal of Markets and Morality, 10(2).