“Modem mainstream economic theory bravely assumes that people make their decisions in such a way as to maximize their utility. Accepting this assumption enables economics to predict a great deal of behavior (correctly or incorrectly) without ever making empirical studies of human actors.”

—  Herbert A. Simon

Simon (1990) "Invariants of Human Behavior" in: Annu. Rev. Psychol. 41: p. 6.
1980s and later

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American political scientist, economist, sociologist, and p… 1916–2001

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“Human behavior is predictable, but, as in physical science, accurate prediction hinges on the correctness of underlying theoretical assumptions. There is, in fact, no prediction without theory; all managerial decisions and actions rest on assumptions about behavior. If we adopt the posture of the ostrich with respect to our assumptions under the mistaken idea that we are thus “being ‘practical,” or that “management is an art,” our progress with respect to the human side of enterprise will indeed be slow. Only as we examine and test our theoretical assumptions can we hope to make them more adequate, to remove inconsistencies, and thus to improve our ability to predict.”

Douglas McGregor (1906–1964) American professor

Source: The Human Side of Enterprise (1960), p. 11 (2006; 13)

Barry Boehm photo

“The dictionary defines "economics" as "a social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services." Here is another definition of economics which I think is more helpful in explaining how economics relates to software engineering.
Economics is the study of how people make decisions in resource-limited situations.
This definition of economics fits the major branches of classical economics very well.
Macroeconomics is the study of how people make decisions in resource-limited situations on a national or global scale. It deals with the effects of decisions that national leaders make on such issues as tax rates, interest rates, foreign and trade policy.
Microeconomics is the study of how people make decisions in resource-limited situations on a more personal scale. It deals with the decisions that individuals and organizations make on such issues such as how much insurance to buy, which word processor to buy, or what prices to charge for their products or services.”

Barry Boehm (1935) American software engineer

Source: Software engineering economics. (1984), p. 4

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“Mainstream economics scholarship produces theory without facts ("pure theory") and facts without theory”

Michel Chossudovsky (1946) Canadian economist

"applied economics"
Source: The Globalization of Poverty and the New World Order - Second Edition - (2003), Chapter 2, Global Falsehoods, p. 27

David D. Friedman photo

“[T]he assumption describes our actions, not our thoughts. If you had to understand something intellectually in order to do it, none of us would be able to walk.
Economics is based on the assumption that people have reasonably simple objectives and choose means to achieve them. Both assumptions are false-but useful.
Suppose someone is rational only half the time. Since there is generally one right way of doing things and many wrong ways, the rational behavior can be predicted but the irrational cannot. If we assume he is rational, we predict his behavior correctly about half of the tie - far from perfect, but a lot better then nothing. If I could do well at the racetrack I would be a very rich man.
[R]ationality is an assumption I make about other people. I know myself.
[R]ationality is an assumption I make about other people. I know myself well enough to allow for the consequences of my own irrationality. But for the vast mass of my fellow humans, about whom I know very little, rationality is the best predictive assumption available.”

David D. Friedman (1945) American economist, physicist, legal scholar, and libertarian theorist

As cited in Ronald J. Baker (2010) Implementing Value Pricing: A Revolutionary Business Model for Professional Firms. p. 122
Source: Hidden Order: The Economics of Everyday Life, 1996, pp.3-5

“During the past three decades numerous empirical studies of economic behavior have been carried out and their theoretical foundation has been clarified. There was a rapid development and articulation of data, theory, and methodology. A new discipline of behavioral economics was emerging [which] consists of the empirical investigations of the behavior of businessmen and consumers in one country in one time. Generalizations about economic behavior emerge gradually by comparing behavior observed under different circumstances.”

George Katona (1901–1981) American psychologist

George Katona, and James N. Morgan (1980). Essays on behavioral economics. Univ of Michigan Survey Research. p. 3

Herbert A. Simon photo

“Global rationality, the rationality of neoclassical theory, assumes that the decision maker has a comprehensive, consistent utility function, knows all the alternatives that are available for choice, can compute the expected value of utility associated with each alternative, and chooses the alternative that maximizes expected utility. Bounded rationality, a rationality that is consistent with our knowledge of actual human choice behavior, assumes that the decision maker must search for alternatives, has egregiously incomplete and inaccurate knowledge about the consequences of actions, and chooses actions that are expected to be satisfactory”

Herbert A. Simon (1916–2001) American political scientist, economist, sociologist, and psychologist

attain targets while satisfying constraints
Simon (1997, p. 17); As cited in: Gustavo Barros (2010, p. 460).
1980s and later

David D. Friedman photo

“Economics is that way of understanding behavior that starts from the assumption that people have objectives and tend to choose the correct way to achieve them.”

David D. Friedman (1945) American economist, physicist, legal scholar, and libertarian theorist

Price Theory: An Intermediate Text, 1986

Barry Boehm photo

“Software Engineering Economics is an invaluable guide to determining software costs, applying the fundamental concepts of microeconomics to software engineering, and utilizing economic analysis in software engineering decision making.”

Barry Boehm (1935) American software engineer

Barry W. Boehm (1981) Software engineering economics. Abstract.

“[There will be movement toward] behavioral economics… [which] involves study of those aspects of men’s images, or cognitive and affective structures that are more relevant to economic decisions.”

Kenneth E. Boulding (1910–1993) British-American economist

Kenneth Boulding (1958) "Contemporary Economic Research".  In Donald P. Ray (ed.). Trends in Social Science, pp. 9-26. as cited in: James Alm (2011) Testing Behavioral Public Economics Theories in the Laboratory http://econ.tulane.edu/RePEc/pdf/tul1102.pdf. Working paper.
Alm proceeds by stating: "Given the essential role of psychological insights in the field, together with the obvious truism that all economics concerns “behavior” in one form or another, a more descriptive name for the field is perhaps “cognitive economics”, as recognized early on by Boulding (1958)."
1950s

“The assumption that individuals act objectively in accordance with purely mathematical dictates to maximize their gain or utility cannot be sustained by empirical observation.”

Richard Arnold Epstein (1927) American physicist

Epilogue, p. 410
The Theory of Gambling and Statistical Logic (Revised Edition) 1977

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