Homo economicus

In economics, homo economicus, or economic man, is the concept in many economic theories portraying humans as consistently rational and narrowly self-interested agents who usually pursue their subjectively-defined ends optimally. Generally, homo economicus attempts to maximize utility as a consumer and profit as a producer. This theory stands in contrast to the concepts of (e.g.) behavioral economics (which examines actual economic behavior, including widespread cognitive biases and other irrationalities), and homo reciprocans (which emphasizes human cooperation).

In game theory, homo economicus is often modelled through the (less restrictive) assumption of perfect rationality.

The term "economic man" was used for the first time in the late nineteenth century by critics of John Stuart Mill’s work on political economy. Below is a passage from Mill’s work that those 19th-century critics were referring to:

"[Political economy] does not treat the whole of man’s nature as modified by the social state, nor of the whole conduct of man in society. It is concerned with him solely as a being who desires to possess wealth, and who is capable of judging the comparative efficacy of means for obtaining that end."

Later in the same work, Mill goes on to write that he is proposing “an arbitrary definition of man, as a being who inevitably does that by which he may obtain the greatest amount of necessaries, conveniences, and luxuries, with the smallest quantity of labour and physical self-denial with which they can be obtained.”

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