Homo Economicus

Categories: Marketing, Econ

We’d all like to think we’re rational beings...but then our world would fit our basic, rational economic models much better than they do. Ask any behavioral economist or neuroscientist, and they’ll tell you: humans aren’t rational.

Homo economicus is a mythical species of man, defined by economists, who is always rational. Homo economicus would never self-sabotage, and always aims to maximize her utility (not just money, but non-money things that provide utility, too).

Because we humans in reality are not homo economicus, even if we’d like to imagine we were, the entire field of behavioral economics exists. Behavioral economics draws from economics, neuroscience, psychology, evolutionary biology, and other fields to try to understand and model real-life...oftentimes irrational...human behavior. Concepts like cognitive biases and loss aversion help economists model homo sapiens, the irrational twin of homo economicus.

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