How do people behave in a world where resources are scarce? The economic approach to answer this question with a simple idea: People respond systematically to incentives, which are determined by institutions. In classical economic Model describes the man as homo economicus, which has constant preferences, self-interested and rational concerns.
This simplification neglects certain irrational tendencies that individual preferences are formed. He also ignores common distortions that are perceived limitations. Both lead to empirical inaccuracies. Therefore we call for the improved, expanded economic approach.
The extended economic approach integrates insights from other social sciences to describe human behavior more accurately. Creating models is thus complex, while empirically correct.
course also meets with this add-on limits and can not describe human behavior with all its complexity. This necessary simplification is often criticized because the man is complex. Precisely for this reason, we believe, however, that simplifying assumptions are necessary to capture human behavior and to lead meaningful strong analysis.
The proposed economic approach is not confined to the economy. It can be extended to social and political areas be, thus creating a bridge between economics and the social sciences . This may be an innovative perspective to change, to understand the society and look to solutions to social problems.
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