11 Facts About Homo economicus

In game theory, Homo economicus is often modelled through the assumption of perfect rationality.

Only naive applications of the Homo economicus model assume that agents know what is best for their long-term physical and mental health.

Homo economicus naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become.

In which Adam Smith explains that the actions of those that are rational and self-interested under homo economicus promotes the general good overall which was understood as the efficient allocation of material wealth.

Homo economicus is a term used for an approximation or model of Homo sapiens that acts to obtain the highest possible well-being for themself given available information about opportunities and other constraints, both natural and institutional, on their ability to achieve their predetermined goals.

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Homo economicus is seen as "rational" in the sense that well-being as defined by the utility function is optimized given perceived opportunities.

Only naive applications of the Homo economicus model assume that this hypothetical individual knows what is best for their long-term physical and mental health and can be relied upon to always make the right decision for themself.

Consequently, the Homo economicus assumptions have been criticized not only by economists on the basis of logical arguments, but on empirical grounds by cross-cultural comparison.

Criticisms of the Homo economicus model put forward from the standpoint of ethics usually refer to this traditional ethic of kinship-based reciprocity that held together traditional societies.

For example, it is difficult if not impossible to understand how Homo economicus would be a hero in war or would get inherent pleasure from craftsmanship.

Yet others argue that Homo economicus is a reasonable approximation for behavior within market institutions, since the individualized nature of human action in such social settings encourages individualistic behavior.