Rational Economic Agent

A Rational Economic Agent is an economic agent who is a calculating agent (able to calculated cost-benefits), a self-interested agent, and an agent with stable tastes.

• AKA: Econ.
• Context:
  • They can perform Arbitrage Acts to take advantage of other's Poor Economic Decisions (such as buying undervalued stock).
• Example(s)
  • Alan Greenspan.
  • …
• Counter-Example(s):
  • an Irrational Economic Agent.
• See: Human Agent, Rational Choice Theory, Economic Invisible Hand.

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References

2011

• (Kahneman, 2011) ⇒ Daniel Kahneman. (2011). “Thinking, Fast and Slow." Macmillan. ISBN:0374533555
  • QUOTE: … Bruno Frey barely recalls writing the piece, but I can still recite its first sentence: “The agent of economic theory is rational, selfish, and his tastes do not change.” … Our two disciplines seemed to be studying different species, which the behavioral economist Richard Thaler later dubbed Econs and Humans. Unlike Econs, the Humans that psychologists know have a System 1. Their view of the world is limited by the information that is available at a given moment (WYSIATI), and therefore they cannot be as consistent and logical as Econs. They are sometimes generous and often willing to contribute to the group to which they are attached. And they often have little idea of what they will like next year or even tomorrow.

2009

• (Ariely, 2009) ⇒ Dan Ariely. (2009). “Predictably Irrational: The Hidden Forces That Shape Our Decisions - revised and expanded edition." Harper-Collins New York. ISBN:978-0-06-135323-9

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