ABSTRACT
Humans are heterogeneous in many ways. Nothing can be more evident than this simple fact. Yet, in mainstream economics, the device of the homogeneous agent or, more formally, the representative agent, has been employed for quite a long, yet uneasy, period of time. Psychologists, on the other hand, have acknowledged the heterogeneity of agents right from the beginning. Various developments in psychometric testing simply show us that humans are empirically different. They are not just bounded rational; they are heterogeneous in cognitive capacity as well as personality. Moreover, anthropologists and sociologists show us that, when put in a social context, they are under different sets of beliefs or norms. From the viewpoint of genetic biology, some human heterogeneities are inherited from parents or ancestors. Nevertheless, mainstream economics has long been silent on all of these human factors, assuming that they are not economically sensible. The empirical evidence accumulated in recent years, however, shows the significance of cognitive capacity, personality, emotion, cultural inheritance, and social norms, from micro to macro. Nevertheless, the modeling techniques which can incorporate agents who are heterogeneous in these dimensions and demonstrate the emergent aggregate behavior through their interactions are less well established in economics.
