Homo Economicus
Homo economicus, also known as 'economic man,' is the archetypal individual in many economic theories, characterized as being entirely selfish and calculating in their pursuit of self-interest. This assumption was strongly articulated by the economist Francis Edgeworth in 1881, who declared that the 'first principle of economics is that every agent is actuated only by self-interest.'
0
1
Tags
Library Science
Economics
Economy
Introduction to Microeconomics Course
Social Science
Empirical Science
Science
CORE Econ
Ch.4 Strategic interactions and social dilemmas - The Economy 2.0 Microeconomics @ CORE Econ
Related
Interdisciplinary Applications of Game Theory
Best Response (in Game Theory)
Equilibrium (in a Model)
Setup for the Adam and Bella Entertainment Choice Game
Advancement of Game Theory through Nash's Work
Strategic Interaction
Enhancing Game-Theoretic Models to Account for Cooperative Behavior
Self-Interest in Economic Models
Homo Economicus
Foundational Importance of Game Theory and Nash Equilibrium for Economic Modeling
Definition of Social Dilemma
Definition of Social Interaction
John Nash
Analyze each of the following scenarios. Match each scenario with the type of social outcome that is most likely to result from the self-interested actions of the individuals involved.
Strategic Business Decisions
The Coffee Shop Dilemma
Analyzing US Financial Fragility
Two competing coffee shops, 'The Daily Grind' and 'Espresso Yourself', are located across the street from each other. Each must independently decide whether to lower their prices. The table below shows the daily profit each shop can expect based on their combined decisions. The first number in each cell is the profit for The Daily Grind, and the second is for Espresso Yourself.
Espresso Yourself: Keep Price High Espresso Yourself: Lower Price **The Daily Grind: The Farmers' Irrigation Dilemma
A social interaction, where each individual's decisions affect the outcomes of others, will always result in a worse outcome for everyone involved when each person acts solely in their own self-interest.
A small city's transportation market for on-demand rides is dominated by a single taxi company that owns all the operating licenses, resulting in high prices and long wait times for consumers. A new city council wants to introduce policies to make this market more competitive. Arrange the following potential policy changes in order from the one that would MOST increase competition to the one that would LEAST increase competition.
Resolving a Shared Resource Dilemma
Non-Social Interactions in Economic Models
The Anil and Bala Crop Choice Scenario as a Game
An economist is building a formal model to predict the outcome of a wage negotiation between a labor union and a company's management. To effectively model this as a strategic interaction, which of the following elements is LEAST critical to define as a core component of the model's basic structure?
Learn After
The Adequacy of the Homo Economicus Assumption
Edgeworth on Self-Interest as the First Principle of Economics
Two competing businesses, A and B, are located on the same river, which is their only source of water for production. Each business must decide independently whether to install an expensive water filtration system that recycles water, reducing their draw from the river. If both businesses install the system, the river remains healthy, and both can operate indefinitely. If only one installs it, the river's water level drops, but both can still operate, though the one who didn't install the system
The Rationality of Contribution
Evaluating the 'Economic Man' Assumption
In a one-time interaction, Person A is given $100 and must offer a portion of it to Person B. Person B can either accept the offer, in which case they both keep the proposed amounts, or reject it, in which case neither person receives any money. Assuming both individuals behave as perfectly rational, calculating agents focused solely on maximizing their own personal gain, which of the following outcomes is most likely?
Evaluating the 'Economic Man' Assumption
The model of 'economic man' (homo economicus) assumes that an individual's decisions are primarily driven by a desire for personal gain, but can also be influenced by feelings of fairness or a sense of duty to their community.
Match each behavioral description with the corresponding model of human decision-making. Each model represents a different set of assumptions about how individuals act.
Analyzing a Decision Through the Lens of Self-Interest
The theoretical model of 'economic man' posits that the primary motivation driving all of an individual's actions and decisions is their own __________.
The Found Wallet Dilemma