HOMO-ECONOMICUS

Debate on Homo-Economicus

[Institution's Name]

Table of Content

Introduction1

Positive side of Homo-Economicus1

Person who puts himself first; Self Centered1

Rational Behavior2

Maximizing Personal Utility3

Fixed Preferences3

Humans are not Homo Economicus4

Acting Altruistically4

Irrational Behavior6

Information8

Conclusion9Debate on Homo-Economicus

Introduction

We can find a growing and huge detailed explanation on the meaning of the Latin word Homo Economicus which is being used worldwide and very often by the researchers and economists. Homo Economicus has some salient features that Adam Smith highlighted. The human behaviour today is not different than it was in Adam Smith's day. Thus, human beings relate to each other and to themselves no differently than 225 years ago (Boyle, 2007).

Positive side of Homo-Economicus

Person who puts himself first; Self Centered

The book “The Wealth of Nations”, written by Adam Smith in 1776 explains that social prosperity's key driver is the self-interest attribute of the people. It is not from the benevolence of the butcher, the brewer, or the banker, that we expect our dinner, but from their regard to their own interest (Adam Smith, 1843). This statement means that the Homo- Economicus tends to adopt a “neutral” behavior towards his fellow mates. One of the close friends of Adam Smith, Scottish philosopher David Hume, bases his philosophy or moral on the typical assumption that humans are nothing but a social creatures (Kirchgassner, 2008).

It is believed that altruism is not consistent with economic rationality of humans that means that people are assumed to behave like a selfish individual. Economists are often concerned that how people behave within the given constraints and an economic man (homo-Economicus) assumed to behave only for his self-interest. It is argued that Individuals having self-interest does not really mean that they are selfish.

Rational Behavior

Phillips and Edwards (2009) say that “Rational Commitment is the degree to which a job serve's an employee's professional, developmental, or financial self-interest”.

They further explained in their research that the reason an employee may only be truly committed to the organization because it is fulfilling the rational and logical need of the employee, wheather it is providing high income, fulfilling his career needs, or serving him with long term professional purpose. Thus, they concluded that employees are rational and they want their rational needs to be met.

The actions of individuals are considered to be rational if with the minimum allocation of resources they achieve the given targets or within the given resources aiming for the maximum possible target achievement and satisfy the economic principle (Woll, 1981). The above mentioned forms are basically called substantial rationality. This principle can be implemented practically by producing goods where the input and output can be assigned by the monetary value (Tsakalotos, 2004). When the researchers are investigating the rationality of individuals, measurement problems of utility, needs of the individuals, it causes considerable problems. Here, we can actually only take formal rationality as our basis, that is to say the way an individual makes decisions. According to this concept, people act rationally and by choosing from the alternative courses of action systematically that are available and known to them ...