Bounded rationalityBounded rationality is the idea that rationality is limited when individuals make decisions, and under these limitations, rational individuals will select a decision that is satisfactory rather than optimal. Limitations include the difficulty of the problem requiring a decision, the cognitive capability of the mind, and the time available to make the decision. Decision-makers, in this view, act as satisficers, seeking a satisfactory solution, with everything that they have at the moment rather than an optimal solution.
Homo economicusThe term Homo economicus, or economic man, is the portrayal of humans as agents who are consistently rational and narrowly self-interested, and who pursue their subjectively defined ends optimally. It is a word play on Homo sapiens, used in some economic theories and in pedagogy. In game theory, Homo economicus is often modelled through the assumption of perfect rationality. It assumes that agents always act in a way that maximize utility as a consumer and profit as a producer, and are capable of arbitrarily complex deductions towards that end.
Mainstream economicsMainstream economics is the body of knowledge, theories, and models of economics, as taught by universities worldwide, that are generally accepted by economists as a basis for discussion. Also known as orthodox economics, it can be contrasted to heterodox economics, which encompasses various schools or approaches that are only accepted by a minority of economists. The economics profession has traditionally been associated with neoclassical economics. This association has however been challenged by prominent historians of economic thought like David Collander.
Social choice theorySocial choice theory or social choice is a theoretical framework for analysis of combining individual opinions, preferences, interests, or welfares to reach a collective decision or social welfare in some sense. Whereas choice theory is concerned with individuals making choices based on their preferences, social choice theory is concerned with how to translate the preferences of individuals into the preferences of a group. A non-theoretical example of a collective decision is enacting a law or set of laws under a constitution.
Neoclassical economicsNeoclassical economics is an approach to economics in which the production, consumption, and valuation (pricing) of goods and services are observed as driven by the supply and demand model. According to this line of thought, the value of a good or service is determined through a hypothetical maximization of utility by income-constrained individuals and of profits by firms facing production costs and employing available information and factors of production.
Preference (economics)In economics and other social sciences, preference refers to the order in which an agent ranks alternatives based on their relative utility. The process results in an "optimal choice" (whether real or theoretical). Preferences are evaluations and concern matter of value, typically in relation to practical reasoning. An individual's preferences are determined purely by a person's tastes as opposed to the good's prices, personal income, and the availability of goods. However, people are still expected to act in their best (rational) interest.
PreferenceIn psychology, economics and philosophy, preference is a technical term usually used in relation to choosing between alternatives. For example, someone prefers A over B if they would rather choose A than B. Preferences are central to decision theory because of this relation to behavior. Some methods such as Ordinal Priority Approach use preference relation for decision-making. As connative states, they are closely related to desires.
Public choicePublic choice, or public choice theory, is "the use of economic tools to deal with traditional problems of political science". Its content includes the study of political behavior. In political science, it is the subset of positive political theory that studies self-interested agents (voters, politicians, bureaucrats) and their interactions, which can be represented in a number of ways – using (for example) standard constrained utility maximization, game theory, or decision theory.
Human behaviorHuman behavior is the potential and expressed capacity (mentally, physically, and socially) of human individuals or groups to respond to internal and external stimuli throughout their life. Behavior is driven by genetic and environmental factors that affect an individual. Behavior is also driven, in part, by thoughts and feelings, which provide insight into individual psyche, revealing such things as attitudes and values. Human behavior is shaped by psychological traits, as personality types vary from person to person, producing different actions and behavior.
MethodologyIn its most common sense, methodology is the study of research methods. However, the term can also refer to the methods themselves or to the philosophical discussion of associated background assumptions. A method is a structured procedure for bringing about a certain goal, like acquiring knowledge or verifying knowledge claims. This normally involves various steps, like choosing a sample, collecting data from this sample, and interpreting the data. The study of methods concerns a detailed description and analysis of these processes.
