The Conceptual Resilience of the Atomistic Individual in Mainstream Economic Rationality

Abstract

ABSTRACT Τhe idea that social influences and social interactions play a central role in individual economic decisions has had a long presence in the history of economics. With the emergence of marginalism, this idea retreated into the background and the concept of the atomistic individual became established in mainstream economic rationality. Starting in the 1970s, there were some attempts to reintroduce non-atomistic preferences in mainstream microeconomic theory in the form of social interactions, interdependent preferences, keeping up with the Joneses, social identity, social preferences, and status concerns. Social preferences have a growing impact among mainstream microeconomics with the advent of behavioral economics, but still they are not in the hard core of the standard theory of choice. The article argues that atomistic preferences are still prevalent, especially in the form of the assumption of the representative agent. It also focuses on the role of methodological individualism and on the theoretical implications of relaxing the assumption of the atomistic individual as the main explanations for the resilience of the notion.