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wants--wealth, time, physical laws of
nature, limits of their own knowledge
about various goods and opportunities,
etc can be the constrains----opportunity
❖ 2) REMM cannot be satiated. He or she
always wants more of some things,
material goods/intangible goods
Nov.28,2001
Wanjun Jiang, Guanghua School of Management, Peking University
❖ 3) Individual preferences are transitive.
Nov.28,2001
Wanjun Jiang, Guanghua School of Management, Peking University
Postulate 2
❖ Each individual’s wants are unlimited
set----be given and external.
Nov.28,2001
Wanjun Jiang, Guanghua School of Management, Peking University
Postulate 4
❖ The individual is resourceful:
❖ Individuals are creative. They are able to conceive of change in their environment, foresee the consequences thereof, and respond by creating new opportunities----the limitation is is not immutable. Human beings are not only capable of learning new opportunity, they also engage in resourceful, creative activities that expand their opportunities in various ways.
❖ Every individual cares, he or she is an evaluator.
❖ 1) The individual cares about almost everything, knowledge, independent,etc
❖ 2) REMM is always willing to make tradeoffs and substitutions.
❖ Understanding human behavior is also the fundamental to understanding how person act ---- game.
❖ We will mainly focus on REMM.
Nov.28,2001
Wanjun Jiang, Guanghua School of Management, Peking UniversityPostulate 3
❖ Each individual is a maximizer:
❖ He or she acts so as to enjoy the highest
level of value possible. Individuals are
always constrained in satisfying their
REMM
❖ Resourceful, Evaluative, Maximizing Model
❖ Postulates 1--4
Nov.28,2001
Wanjun Jiang, Guanghua School of Management, Peking University
Postulate 1
❖ 1) If we designate those things that REMM values positively as GOODS, then he or she prefers more goods to less, GOODS can be anything from art objects to ethical norms.
Nov.28,2001
Wanjun Jiang, Guanghua School of Management, Peking University
❖ REMMs at work:
❖ Think about the effects of newly imposed constrains to human behavior. REMMs’ response to a new constrains is to begin searching for substitutes for what is now constrained, a search that is not restricted to existing alternatives. They will invent alternatives that did not previously exist. Examples…...
I. The Nature of Man
model about human behavior
Nov.28,2001
Wanjun Jiang, Guanghua School of Management, Peking University
❖ Understanding human behavior is fundamental to understanding how organizations function, whether are profit-making firms, non-profit enterprises, or government agencies.