Economic Man


DEFINITION of 'Economic Man '

First coined in the late 19th century, the term 'Economic Man' has developed to refer to a hypothetical individual who acts rationally and with complete knowledge, but entirely out of self-interest and the quest to maximize personal utility. Economic Man is an imaginary figure who is able to satisfy economic models that push for consumer equilibrium. All of Economic Man's choices are based on the fulfillment of his or her "utility function", meaning the ability to maximize any situation that involves choice.

BREAKING DOWN 'Economic Man '

Many economic models are hypothetical, and the assumptions on which they are built deviate from real-world conditions. For example, many economic-modeling assumptions assume that demand is a linear function of price. While this may sometimes be the case with certain goods, it is not reflective of the actual consumer environment. Economic Man is the principal, symbolic of every individual in society, whose preferences satisfy the condition specified in the models.

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  5. What is the utility function and how is it calculated?

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