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The economic consequences of homo economicus: neoclassical economic theory and the fallacy of market optimality

Author

Listed:
  • David Calnitsky

    (University of Wisconsin-Madison)

  • Asher Dupuy-Spencer

    (CUNY Graduate Center)

Abstract

This essay presents a critique of the standard ascension from the rational agent to the optimal market in economic theory. Critiques of homo economicus are found unsatisfactory on grounds that its employment allows for the prediction of essential features of actual markets. Using this same criterion we introduce Gary Becker’s essay, ‘Irrational Behavior and Economic Theory,’ which demonstrated that the same features of markets could be derived from non-rational behaviour. Thus, non-rationality is equally predictive but is less restrictive than rationality. Once the assumption of rationality is relaxed, the concept of market optimality (though not market order) must also be sacrificed.

Suggested Citation

  • David Calnitsky & Asher Dupuy-Spencer, 2013. "The economic consequences of homo economicus: neoclassical economic theory and the fallacy of market optimality," The Journal of Philosophical Economics, Bucharest Academy of Economic Studies, The Journal of Philosophical Economics, vol. 6(2), May.
    • Handle: RePEc:bus:jphile:v:6:y:2013:i:2:n:5
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    References listed on IDEAS

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    Cited by:

    1. Ahmed Hamed Al-Abbadi & Adam Abdullah, 2017. "Modeling Psychology in Islamic Wealth Management," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(10), pages 64-85, October.

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    More about this item

    Keywords

    neoclassical economics; rationality; philosophy of social science;
    All these keywords.

    JEL classification:

    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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