The Individual in the Islamic Iktisâd: An Analysis from the Behavioural Economics Pespective

Abstract

Neoclassical economics (Mainstream) has universalized the individual on the basic assumptions of rationality and selfishness. It has defined its purpose as maximizing its utility. However, recent studies show that the definition of rational individual is insufficient to explain the real person. As a matter of fact, while behavioural economics justifies people's cognitive biases at this point, Islamic iktisâd, which is based on Islamic morality, put forward the moral structures of individuals. When evaluated from this point of view, it is seen that behavioural economics and Islamic iktisâd agree that individuals are not rational. In this study, the rational individual phenomenon in mainstream economics, the individual phenomenon in behavioural economics and the individual phenomenon in Islamic iktisâd were analysed based on literature review, respectively. From the study, it was analysed that the moral structure suggested by Islamic iktisâd as the basic principle when defining human beings would move individuals away from the assumption of rationality. This result occurred as a contribution of Islamic iktisâd to behavioural economics, as it emphasized the sense of morality, which is a cognitive bias according to behavioural economists.