What is the homo-Economics (BER 32)? What are its defining characteristics? Discuss whether it is a realistic approximation of human behavior, in particular considering preference formation.
Homo-economics is the assumption that all men are self-interested and rational. The defining, unchanging characteristics are that people would be calculating, amoral and consider how their actions influence themselves and not others (maximizing preferences). This is not a realistic approximation of human behavior because there are generous people whose motivations are out of concern for others and they don’t spitefully hurt others. The non-homo-economics man has preferences that constitute a good, happy outcome unlike the homo-economics man. While the non-homo-economics man gets pleasure out of this, they are not selfish due to their kind motivation.
