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There is a contradiction, you just chose not to see it. Homo economicus assumes that the utility of the person is reflected in price optimization. If you define
by asgard1024 11y ago
There is a contradiction, you just chose not to see it. Homo economicus assumes that the utility of the person is reflected in price optimization. If you define utility in a circular way, based on the behavior of real humans, then it will become completely meaningless concept.
- baddox 11y agoAs far as I can tell, the homo economicus model just describes humans as seeking to maximize their own utility function.
- roel_v 11y agoIf there is disutility in throwing away 10 nuggets, then it is optimal to order only 10, because there is only utility from 10 either way. The article seems to suggest that people's utility is measured in kcal/dollar - which is silly even to the most socially inept economist.
- savanaly 11y ago>Homo economicus assumes that the utility of the person is reflected in price optimization. But obviously only price optimization between two identical bundles. It only says we'll pick the lower price between bundles A and B if we have the same valuation of them. You may be confused because often intro econ textbooks assume that the marginal value for something never goes negative. But that assumption is broken here. Chicken nuggets do not have a consistent per-nugget valuation. When purchased ten at a time, they are more valuable per nugget than when purchased twenty at a time. To such a degree, clearly, that even when the twenty nuggets are costed at a much lower unit price they are less attractive. There are actual challenges to homo economicus and the assumption of rationality, as in this paradox: http://www.thebigquestions.com/2010/10/12/how-rational-are-you/ http://www.thebigquestions.com/2010/10/12/how-rational-are-y.... But the chicken nugget result is not one of those challenges.
- tpeo 11y agoRather, it becomes "revealed preference theory".