Question

What is the homo-Economics? What are its defining characteristics? Discuss whether it is a realistic approximation of human behavior, in particular considering preference formation.

Answer 1

Homo Economicus is a term that describes the rational human being assumed by some economists when deriving, explaining and verifying theories and models. Homo economicus, or economic human, is the figurative human being characterized by the infinite ability to make rational decisions. Certain economic models have traditionally relied on the assumption that humans are rational and will attempt to maximize their utility for both monetary and non-monetary gains. Modern behavioral economists and neuroeconomists, however, have demonstrated that human beings are, in fact, not rational in their decision making, and argue a "more human" subject (that makes somewhat predictable irrational decisions) would provide a more accurate tool for modeling human behavior.

Characteristics:

Efficient

Predictable

Motivated by best deals

Influenced heavily by marketing

Mostly ration in buying decisions

Modern economists do not believe this concept.They believe that human behavior is more irrational.