Economic man ‘knows the price of everything and the value of nothing’, so said because he or she calculates and then acts so as to satisfy best his or her preferences. The value of these preferences is immaterial. The hypothesis has nevertheless proved remarkably powerful not only in economics but across the social sciences where it has spawned ‘rational choice’ accounts of many aspects of social life. This ambition has attracted critics both from without and within. The latter have developed, with insights from psychology on how people acquire and use information, a less elegant but arguably more realistic model.
KeywordsBehavioural economics Bounded rationality Comparative statics Economic man Expected utility maximization Game theory Homo economicus Hume, D. Information economics Institutional economics Kant, I. Law of small numbers Learning Neoclassical economics Preferences Rational behaviour Rational expectations Reference dependence Risk Satisficing Self-serving biases Social norms Subjective probability Welfare economics White noise
- Becker, G. 1976. The economic approach to human behaviour. Chicago: Chicago University Press.Google Scholar
- Downs, A. 1957. An economic theory of democracy. New York: Harper Row.Google Scholar
- Sen, A. 1999. Commodities and capabilities. Oxford: Oxford University Press.Google Scholar
- Simon, H.A. 1976. From substantive to procedural rationality. In Method and appraisal in economics, ed. S. Latsis. Cambridge: Cambridge University Press.Google Scholar