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The Economic Man 2.0

“For most of the past two centuries, economic thinking has been dominated by the concept of Homo economicus. The hypothetical Economic Man knows what he wants; his preferences can be expressed mathematically in terms of a ‘utility function.’ And his choices are driven by rational calculations about how to maximize that function: whether consumers are deciding between corn flakes or shredded wheat, or investors are deciding between stocks and bonds, those decisions are assumed to be based on comparisons of the ‘marginal utility’, or the added benefit the buyer would get from acquiring a small amount of the alternatives available.”Paul Krugman on the rational-agent model

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