Did the 'Homo Economicus' Mutate to the Concept of Behavioural Finance and Economics?

Seminar paper from the year 2006 in the subject Psychology - Work, Business, Organisational and Economic Psychology, grade: 1,00, Free University of Berlin (FB Erziehungswissenschaften und Psychologie, Wirtschafts- und Sozialpsychologie), course: Wirtschaftspsychologie, 33 entries in the bibliography, language: English, abstract: Former classic economic theories mainly strengthened the concept of the 'homo economicus', who strongly behaves economical and rational. Nowadays however, some argue this supports not the reality, and so academic research progressed. For this, laureate Kahneman et al developed the prospect theory which is assumed to describe people's economical behaviour better than traditional theories.

Therefore the essay elaborates on the concept of behavioural finance and econom-ics as well as it checks, whether the homo economicus has mutated to this. How-ever, although there is criticism, the hypothesis is humans are bounded rational and therefore only conditioned able to be described as homo economicus.

To gain insight, a brief introduction on theory, homo economicus and recent ob-servations of efficiency in human action and rationality is given. Later the concept of behavioural finance and economics is brought in and findings in human behav-iour are discussed together with examples from heuristics, economical framing and anomalies. Finally, an assessment of essay and hypothesis sums all up.