7 Economic Behavior and Rationality

1457 Economic Behavior and RationalityIn chapter 1, we defined Economic actors, or Economic agents, as people or organizations engaged in any of the four essential Economic activities: production, distribution, consump-tion, and resource maintenance. Economic actors can be individuals, small groups (such as a family or a group of roommates), or large organizations such as a government agency or a multinational corporation. Economics is about how these actors behave and interact as they engage in Economic activities. In this chapter we explore the Behavior of individual Economic actors people. We look at contemporary research on this topic, and, where it seems relevant, compare this with older ec o n o mI c un d e r s t a n dI n G s o f hu m a n mo tI v a tI o n sEconomics is a social science it is about people and about how we organize ourselves to meet our needs and enhance our well-being. Ultimately, all Economic Behavior is human Behavior . Sometimes institutional forces appear to take over (witness the tendency of some bureaucracies to expand over time), but if you look closely at any Economic outcomes, you will find that they are ultimately determined by human decisions or Behavior .

145 7 Economic Behavior and Rationality In Chapter 1, we defined economic actors, or economic agents, as people or organizations engaged in any of the four essential economic activities: production, distribution, consump-

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