Personality Psychology

Neoclassical economic theory considers individuals as consumers, with a uniform persona and indistinguishable by personality, categorised as making rational choices based on the availability of perfect information. However, individuals have separate and distinct personalities. For example, in the field of psychology, an individual’s personality is associated with a specific set of beliefs which encompasses a thinking processes, values and personality traits. However, in economic theory, while individual preferences persist due to the assumption that individuals make rational choices facilitated by the assumption of perfect knowledge, beliefs arise through the process of equilibrium, through the expression of choice between bundles of different goods. In this case, economists would conclude that an individual’s beliefs would have an impact on his/her choices. Moreover, beliefs depend upon ideologies or cognitive frames. To an extent, the latter imposes limitations on the potential data which can be observed and processed. This is because as the environment changes, either by economic crises or by technological change, the beliefs and perceptions of some individuals may change while those of others remain unchanged. The result may be that institutional change in society remains constrained.