Homo oecenomicus

Question 1

5 typical traits that characterise homo oecenomicus

Answer 1

1. More is better than less
2. decreasing marginal utility (marginalize revolution)
3. downward sloping demand curve (opportunity cost)
4. Selfishness and wealth maximisation
5. Constraint maximisation

Question 2

main criticisms of homo oecnomicus model

Answer 2

This line of criticism forms an entire field, behavioral economics.
-This model has been criticized repeatedly on empirical grounds, in particular on the grounds that humans are actually not that rational, psychology has documented numerous cognitive biases, and so on.

1. The first problem is with the idea of “rationality”
   - To describe human behavior as “rational”, we must first assume that there exists a fixed model of the world and personal preferences, and that this model is not a subject of inquiry

2) The assumption of “rationality” also assumes that people have a fixed model of the world over which that rationality is exerted.
-They do not learn, for example, and they do not need to be taught either. They just happen to know everything useful there is to know about the
world.
-Building an adequate model of the world, of the consequences of one’s actions, is considered outside the realm of economic theory.

3) Finally, implicit with the idea of “rational behavior” is caricatural reductionism.
- Or to rephrase, individual rationality is not the same as collective rationality

EVAUATIVE POINT:
This issue is actually an important theme of evolutionary theory. Namely, how can social species exist at all, if individualist behavior is rewarded by increased survival and reproduction rate?

Question 3

What are the assumptions of framing human behaviour in terms of individual rationality

Answer 3

1) people already have an accurate model of the world, and so no social organization is required to ensure that people’s actions have their intended consequences, this is already solved by people’s “rationality”;
2) people have preexisting fixed “preferences”, and so we don’t need to care about what a “good society” might mean, this is already taken care of by the “preferences”;
3) there is no collective rationality beyond individual rationality, and so there is in fact no society at all, just a group of independent people