ECON 2010 Lecture Notes - Lecture 1: Fallacy, Invisible Hand, Human Behavior

• School: CU-Boulder
• Department: Economics
• Course: ECON 2010
• Professor: Prof.Philip Graves

Document Summary

Read the first 3 chapters of the textbook. Economist assume that, for the most part, people engage in rational or purposeful behavior. Rational behavior means people do the best they can based on their values and information, under current and anticipated future circumstances. People do not intentionally make decisions to make themselves worse off, or enter into trades where they get nothing in return. They make decisions with some expected outcomes in mind. People may not know which decision will yield the most satisfaction or happiness, but they select the one they expect to give them the best results among the other options. The invisible hand (the market) guides people"s self interests. Theories and models are simplified explanations that help us understand and predict why economic agents like consumers, firms, producers, etc. behave the way they do. They are designed to help us predict economic behavior.