The Behavioral Economics in Marketing’s Podcast Homo economicus | Definition Minute | Behavioral Economics in Marketing Podcast
Jan 6, 2023
A quick definition of homo economicus as the idealized, perfectly rational decision-maker. The host contrasts that theoretical model with real human behavior and bounded rationality. They explain why economists use the abstraction to simplify cause and effect. The conversation highlights how comparing the model to actual choices uncovers gaps marketers can exploit.
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Homo Economicus As A Simplifying Model
- Homo economicus is a theoretical abstraction of a perfectly rational, all-knowing decision maker.
- Comparing real human behavior to this model highlights where expectations and reality diverge.
Key Assumptions Of The Economic Man
- The model assumes complete rationality, perfect information, consistent choices, and self-interest.
- These assumptions let economists reduce problems to simple cause-effect relationships like "Y is a result of X."
Use The Model To Find Practical Gaps
- Use homo economicus to simplify problems and create clear causal predictions under ceteris paribus.
- Then test reality against the model to identify actionable gaps for marketing change.