Introduction

In economic theory, the “homo economicus,” with his/her rational decision-making, stable preferences, egocentrism, and maximizing utility, used to be the economic model of man. In Simon’s (1957, p. xxiii) words: “Economic Man has a complete and consistent system of preferences that allows him/her always to choose among the alternatives open to him/her. He/she is always completely aware of what these alternatives are. There are no limits on the complexity of the computations he/she can perform in order to determine which alternatives are best.” Becker (1976) outlined rational choice theory and applied this to domains outside traditional economics, from crime to marriage (Becker, 1981), and obviously also financial behavior. Becker believed that psychologists and sociologists could learn from the “rational man” assumption advocated by neoclassical economists. He did not assume that consumers actually use economic models and trade-offs to select a marriage partner or make a financial decision (descriptive validity), but he assumed that economic models are able to predict outcomes of human decision processes (predictive validity).