Econs vs. Humans

Key Insight

Economic theory typically models decision-makers as 'Econs,' who are characterized by perfect rationality, complete selfishness, and stable preferences. This idealized agent operates with unlimited cognitive capacity and always makes consistent, logical choices. This perspective views human behavior through the lens of maximizing utility and adhering to strict axioms of rationality.

In contrast, psychology offers a model of 'Humans,' who are recognized as being neither fully rational nor entirely selfish, and whose preferences are inherently unstable. Humans possess a System 1, which implies that their perception of the world is limited by immediately available information (WYSIATI). This cognitive constraint often leads to decisions that are inconsistent or deviate from purely logical paths.

Humans also exhibit traits like generosity and a willingness to contribute to their groups, challenging the assumption of pure self-interest. Furthermore, they frequently have little foresight into their future desires. This fundamental disparity between theoretical Econs and observed Humans highlights a significant difference in how these two academic disciplines understand and study decision-making.