THE global financial crisis has shaken the foundations of a long-dominant paradigm in economic theory, Homo economicus. This is the idea that individuals and firms make informed, rational judgments about risks and opportunities so as to maximise their pay-offs. The crisis has sparked the search for more accurate and scientific models to explain how people and firms behave in real life, and how financial markets do, and should, operate.
Bankers, hedge-fund managers, and policy-makers are human beings, so the common-sense idea that human nature might have something to do with their decision-making is taking hold among the wreckage of confidence in the current system and models. Together with a broader community of evolutionarily minded biologists, economists and psychologists, I argue that new light may be shed on the foundations of economics and business from an unlikely source: evolution.
Competition between firms has often been portrayed as a Darwinian struggle where ...
To continue reading this article, subscribe to receive access to all of newscientist.com, including 20 years of archive content.
