Abstract
Homoeconomicus is the top player of economics. Economic theoretical insights, models, approaches and frameworks are built upon homoeconomicus also known as economic human. In order to act consistent with the theory and not to violate its basic tenets, homoeconomicus is equipped with some spesific characteristic properties. Homoeconomicus is designed as an unemotional, selfish, rational utility maximizer. In other words homoeconomicus was born as a perfect representative of the theory. So it is a dual structure both supports each other. This research aims to better understand homoeconomicus and why and how homoeconomicus fails in real economic life.
Highlights
In economics; economic behavior, economic decision making, decision making under risk and uncertainty are explained by the theory of expected utility which was suggested by John Von Neumann who is a mathematician and Oscar Morgenstern who is an economist in 1944 (Von Neumann ve Morgenstern, 1944)
In order to act consistent with the theory and not to violate its basic tenets; homoeconomicus is equipped with some specific characteristic properties
Homoeconomicus has been the ultimate representative of economics and economic rationality
Summary
In economics; economic behavior, economic decision making, decision making under risk and uncertainty are explained by the theory of expected utility which was suggested by John Von Neumann who is a mathematician and Oscar Morgenstern who is an economist in 1944 (Von Neumann ve Morgenstern, 1944). The theory of expected utility uses invariance, completeness (complete-ordering), transitivity, continuity, independence, unequal-probability, Archimedean, monotonicity, substitution (independence of irrelevant alternatives) axioms to explain economic preferences, decisions, choices and behavior. The axioms of the theory of expected utility are used to explain rational economic behavior; including rational economic decision making, rational economic choice and rational economic preferences. The theory of expected utility evaluates the concepts of rationality and irrationality in accordance with the axioms. The theory of expected utility theory had gained great currency because of its solid axiomatic structure when it was suggested in 1944, inevitably it didn’t take so long that the theory itself and its axioms were called into question. This research calls into question the validity of the concept of homoeconomicus.
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