The theory of consumer behavior (16)

The concept of rational economic man is based on the principle that self interest is the main objective of the economic agents.

Edgeworth says that:

“The first principle of economics is that every agent is activated only by self interest.

(Chapra 2000: 22)

Economic man in this sense is only concerned to maximize utility for it can fulfill their self interest.

Thus, the well being of others in society are totally ignored.

Although the definitions of rationality are still debated among economists.

It constitute as maximize self interest in rational economic man is well accepted.

On the other hand, laisez faire is referred to the term free market.

It is believed that, the market will run perfectly without any interference particularly from government.

to be continued...

Source: Islamic Science University of Malaysia