According to Rittenberg and Tregarthen (2009), economics is “a study of choice”. This simple assumption is the most basic definition of the general economic thought because if there is a scarcity present, then there is a choice to be made about this scarce resource. Moreover, Rittenberg and Tregarthen (2009) also point out that what distinguishes economic approach from any other science, whether social or not, is that economists study this “choices” assuming that people try to maximize their decision making to reach a maximal value. These maximizing choices are presumed to be made at the margin and with the aim to reach maximal profits or utility (Rittenberg & Tregarthen, 2009). In this paper, I will explain the concept of maximization and evolvement of Economic man in economic theory. I would then provide the point of criticism related to the concept of Economic man.
Maximization, as the word could suggest, is choosing the best alternative that will lead to the best possible outcome …show more content…
Many economic scholars and researches challenged the question of rationality presented in the Economic Man assumption and developed a new stream in economics known as Behavioral Economics (Fox, 2015). It was discovered by conducting psychological experiments that when making economic decision, people are not always rational (Fox, 2015). New concepts were developed such as heuristics and biases, which prevailed in situations where the data is incomplete or not fully reliable and there is a high degree of uncertainty (Fox, 2015). As was pointed out in our textbook, economic models are very simplified versions of reality and are not able to take into account all nuances (Rittenberg & Tregarthen, 2009). Therefore, making decisions and analyzing economic situation by strictly via the model of Economic man does not always yield correct
Maximization, as the word could suggest, is choosing the best alternative that will lead to the best possible outcome …show more content…
Many economic scholars and researches challenged the question of rationality presented in the Economic Man assumption and developed a new stream in economics known as Behavioral Economics (Fox, 2015). It was discovered by conducting psychological experiments that when making economic decision, people are not always rational (Fox, 2015). New concepts were developed such as heuristics and biases, which prevailed in situations where the data is incomplete or not fully reliable and there is a high degree of uncertainty (Fox, 2015). As was pointed out in our textbook, economic models are very simplified versions of reality and are not able to take into account all nuances (Rittenberg & Tregarthen, 2009). Therefore, making decisions and analyzing economic situation by strictly via the model of Economic man does not always yield correct