Homo economicus

The term homo economicus, or economic man, is the portrayal of humans as who are consistently, narrowly , and who pursue their subjectively-defined ends. It is a word play on , used in some and in.

In, homo economicus is often modelled through the assumption of perfect rationality. It assumes that agents always act in a way that as a  and  as a, and are capable of arbitrarily complex deductions towards that end. They will always be capable of thinking through all possible outcomes and choosing that course of action which will result in the best possible result.

The rationality implied in homo economicus does not restrict what sort of preferences are admissible. Only naïve applications of the homo economicus model assume that agents know what is best for their long-term physical and mental health. For example, an agent's utility function could be linked to the perceived utility of other agents (such as one's wife or children), making homo economicus compatible with other models such as , which emphasizes human.

As a theory on human conduct, it contrasts to the concepts of, which examines and other , and to , which assumes that practical elements such as cognitive and time limitations restrict the rationality of agents.

Homo economicus is a term used for an approximation or of  that acts to obtain the highest possible well-being for him or herself given available information about opportunities and other constraints, both natural and al, on his ability to achieve his predetermined goals. This approach has been formalized in certain models, particularly in.

Homo economicus is seen as "rational" in the sense that well-being as defined by the is optimized given perceived opportunities. That is, the individual seeks to attain very specific and predetermined goals to the greatest extent with the least possible cost. Note that this kind of "rationality" does not say that the individual's actual goals are "rational" in some larger ethical, social, or human sense, only that he tries to attain them at minimal cost. Only naïve applications of the homo economicus model assume that this hypothetical individual knows what is best for his long-term physical and mental health and can be relied upon to always make the right decision for himself. See and  for further discussion; the article on  widens the discussion.

As in social science, these assumptions are at best approximations. The term is often used derogatorily in academic literature, perhaps most commonly by, many of whom tend to prefer structural explanations to ones based on rational action by individuals.