HOMO ECONOMICUS

A Latin term which means economic human. It describes the rational human being assumed by some economists when deriving, explaining and verifying theories and models. It is the figurative human being characterized by the infinite ability to make rational decisions. Certain economic models have traditionally relied on the assumption that humans are rational and will attempt to maximize their utility for both monetary and non-monetary gains. Modern behavioral economists and neuro economists, however, have demonstrated that human beings are, in fact, not rational in their decision making, and argue a "more human" subject (that makes somewhat predictably irrational decisions) would provide a more accurate tool for modeling human behavior.

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