ABSTRACT
Leon Walras, in trying to construct an economic theory on analogy of Newtonian physics, confronted the problem of how there could be any regularity when humans have richness of emotions, motives, expectations, and uncertainties which affect all of them. Walras solved his problem by limiting human beings to a single drive, infinite selfishness. This—under the modern more palatable guise that human beings rationally maximize self-interest—is still fundamental assumption on which neoclassical economic theory rests. A remarkable aspect of the fundamental assumption is that it lacks substantiation. This assumption together with equilibrium, in Robert Solow's characterization, is the canonical hypotheses of economic theory. The second part of fundamental assumption is that every individual acts rationally in making choices to maximize his self-interest. "Irrational behavior" is that which frustrates or does not contribute to attainment of an agent's goal or purpose. "Equilibrium" is a condition in which all acting influences cancel each other out, resulting in a stable, balanced, or unchanging system.
