Learn Before
Edgeworth on Self-Interest as the First Principle of Economics
In his 1881 book Mathematical Psychics, Francis Edgeworth articulated a core belief of subsequent economic analysis, stating: 'The first principle of economics is that every agent is actuated only by self-interest.' This assertion formalized the focus on purely selfish behavior in economic models and marks a contrast to earlier perspectives, like Adam Smith's, which acknowledged a role for concern for others.
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
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 has a significant cost advantage. If neither installs the system, the river will be depleted within a year, forcing both businesses to shut down. Assuming both business owners behave as perfectly rational, calculating, and self-interested agents focused solely on maximizing their own individual profit, what is the most likely outcome?
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
Learn After
Foundations of Economic Motivation
The statement, 'The first principle of economics is that every agent is actuated only by self-interest,' as articulated in the 1881 work Mathematical Psychics, represented a significant clarification for economic theory. Which of the following best analyzes the primary implication of adopting this principle for economic modeling?
The statement, 'The first principle of economics is that every agent is actuated only by self-interest,' when used as the foundation for an economic model, implies that actions which appear altruistic (like anonymous donations) cannot be rationally explained and must be considered outside the scope of economic analysis.
Match the economic thinker with the statement that best represents their core view on human motivation as a basis for economic analysis.
Explaining Seemingly Altruistic Behavior
The Shift in Economic Thought
Critique of the Self-Interest Principle
The principle that 'every agent is actuated only by self-interest,' a foundational concept for much of modern economic modeling, was formally articulated by ______ in his 1881 work Mathematical Psychics.
Evaluating Policy Through the Lens of Self-Interest
Corporate Decision-Making and Self-Interest