Insights from behavioural science and cognitive and social psychology are included in the analyses. There is scepticism about the assumption that human beings have predefined preferences even over complex environmental problems. Rather, preferences have to be formed within deliberative, social processes.
Agents are only boundedly rational. Their rationality is limited by the tractability of the decision problem, the cognitive limitations of their minds, and the time available to make the decision. Agents generally do not optimize in the standard sense. Rather, people engage in cognitive processes such as social comparison, imitation and repetitive behavior (habits) so as to efficiently use their limited cognitive resources.
Inside a certain mode of production there are powerful material and social structures, such as competition, that induce people to behave accordingly. Therefore, humans are not necessarily competitive or collaborative but human behavior is affected by the historically specific mode of production.
The analysis focuses on economic subjects who act in a “boundedly rational” way, as opposed to being rational and utility maximising actors. These economic subjects are neither capable of discerning all possible actions nor of assessing their costs and utility. Therefore, they are unable to calculate an optimal course of action. Instead, it is assumed that economic subjects' decisions are based on heuristics.
Individuals cannot be separated from their social and economic contexts, which determine decisions and actions. Hence, humans neither behave autonomously nor necessarily rationally or in a utility maximizing fashion.
Due to psychological reasons and fundamental uncertainty, individuals compare themselves to others and build their decisions partly on rules of thumb and habits. Furthermore, individuals always act in a certain institutional context which shapes their beliefs and actions, and links different classes of agents or types of economic units.
Humans are social beings that derive preferences and value-orientations from the social context they are embedded in as well as from direct interactions with other people. Those interactions are not restricted to the market, such as relations between producers and consumers, but also comprise personal, political and further social relations.
Humans and their preferences are relatively autonomous and independent of external influences. Actors try to reach their goals, i.e. the maximization of their utility, according to their preferences as efficiently as possible.
Both the analytic concept of the simplistically constructed homo economicus and the related concepts of instrumental rationalism, utility maximization and perfect information exist alongside conceptions of human beings including social elements such as institutions, power and social context.
Rules, heuristics, beliefs, desires, moods, emotions etc. all determine the behavior of individuals.