#economicus

 Let’s talk about Economy Theory. Economics is the social science that describes how economies and economic agents operate under resource scarcity. Economies reference systems of activity consisting of the production, distribution, and consumption of products and services. Such activities are mediated by agents and principals. Economic agents are decision makers serving their desires within the system, whereas principals authorise the actions of agents. Microeconomics concerns their behaviour (e.g., as individuals and within organisations). In a broader sense, Macroeconomics describes the aggregation of quantities within economic systems. Further sub-disciplines also exist, such as econometrics and contract theory. Where the academic disciple advocates “what ought to be” such science is said to be normative, rather than positive (which simply presents what is).

Economic systems used to be presented as simple dichotomies based on the coordination and ownership of resources. Current world economies are more complex, exhibiting market-oriented mixed attributes. Therefore the table below does not provide an exhaustive list of the types of economies that exist/can be described (e.g., economies can also be described by regional scope, centralisation, and openness). However, all economic systems must provide a basis for what and how much to produce, as well as the owners of the factors and outputs of production.

Common Typology (Economic Systems):

Ownership Form Public Private Allocation Mechanism (Top-Level) Planned (“Hands-on”) Socialist Planned Command Capitalism Market (“Hands-off”) Market Socialism Market Capitalism

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Economists since Keynes have argued that total rationality and complete knowledge are poor assumptions: real people have limited time to process information and make optimal choices in most situations, a rough guess is good enough.

Psychologists and behavioral economists criticize Homo economicus’s selfish motivations laboratory experiments have shown that people care about fairness and occasionally even act altruistically.