2023-08-01 Tue 14:29 ![[Pasted image 20231102170055.png]] AI: tell me about the concept "homo economicus". > [!ai]+ AI > > "Homo Economicus" is a term that originated in economic theory referring to a hypothetical human being who behaves in ways that are fundamentally rational and self-interested. The figure of homo economicus acts upon information available to maximize their personal utility or satisfaction. > The concept assumes that this "economic man" has perfect access to information, can effectively process it, and make decisions purely based on facts without being influenced by emotions, biases, or social influences. Consequently, their actions always lead towards optimal outcomes regarding their personal economy. > However, this model has been criticized extensively due to the fact that people's behavior often deviates from rational perfection. Human beings do not always act rationally or selfishly but can be influenced by emotions, societal norms and value judgements. Thus the concept of homo economicus does not fully capture the complexity of human nature. > In response to these critiques, economics has progressively incorporated more psychological and sociological insights into its models with approaches like behavioral economics. > The concept assumes that this "economic man" has perfect access to information My understanding has been that this "economic man" is a rational agent but not a diety — he makes use of all the information available to him, but he's not omniscient. He doesn't have "perfect access to information". He's a proper rational agent, but that rationality is bounded. Is that right? Or was this concept meant to designate someone with perfect information? > [!ai]+ AI > > You're correct in your understanding. While early models under the "homo economicus" concept might have implicitly assumed perfect information for simplicity, it's recognized that in reality, this isn't feasible. It's more accurate to say that "homo economicus", or the "economic man", attempts to maximize utility based on his available information and understanding of the world. > In other words, rationality in this case is indeed often described as bounded, acknowledging human limitations and the imperfect nature of real-world information. It's also important to note that even when individuals have access to information, they may not fully understand it or may interpret it differently due to cognitive biases or lack of knowledge — deviations from the homo economicus model that are explored in fields such as behavioral economics. > So while the term "perfect information" might occasionally be used in discussing homo economicus, it is generally understood within a theoretical context rather than reflecting real-world conditions. Your understanding aligns with these nuances of the concept.