Essential Microeconomics is designed to help students deepen their understanding of the core theory of microeconomics. Unlike other texts, this book focuses on the most important ideas and does not attempt to be encyclopedic. Two-thirds of the textbook focuses on price theory. As well as taking a new look at standard equilibrium theory, there is extensive examination of equilibrium under uncertainty, the capital asset pricing model, and arbitrage pricing theory. Choice over time is given extensive coverage and (...) includes a basic introduction to control theory. The final third of the book, on game theory, provides a comprehensive introduction to models with asymmetric information. Topics such as auctions, signaling and mechanism design are made accessible to students who have a basic rather than a deep understanding of mathematics. Examples and diagrams are used to illustrate issues as well as formal derivations. (shrink)

Provides a rigorous treatment of some of the basic tools of economic modeling and reasoning, along with an assessment of the strengths and weaknesses of these tools Complements standard texts Covers choice, preference, and utility; ...

There is a very apparent conflict between economists and ethicists over the moral standards that should be applied to the managers of business firms. The view of most economists is that moral standards in business are not relevant, beyond the normal personal obligations to speak the truth and observe the law, because profit maximizing behaviour, under market and resource constraints, leads inexorably to social welfare optimization. The opposing view of most humanists is that modern markets are not competitive enough to (...) be constraining, that profit maximization often leads to social harm, and that welfare benefits are unjustly distributed. The article examines the moral constructs in microeconomic theory and the ethical objections to that theory at both the pragmatic and theoretic levels, and concludes that inappropriate assumptions about the nature and worth of human beings in the economic paradigm require the use of moral standards for business decisions and actions. (shrink)

It would be very difficult to discuss the question concerning the hypothesis of omniscience in microeconomics without relating this hypothesis to the more fundamental hypothesis of rationality (usually referred to as rationality principle or postulate) which is at the base of the very idea of an economic theory and even social sciences. Indeed omniscience is a quality which was typically attributed to homo oeconomicus whose essential characteristic is to be perfectly "rational". This association between omniscience and rationality goes back (...) to the marginalist revolution which progressively brought economists to model economic agents as rational calculators who make each decision by systematically maximizing their utility through the standard application of more or less sophisticated mathematical methods. But since the very idea of such a maximization has no meaning if all relevant parameters and variables are not carefully taken into account, it became relatively common to associate omniscience (the required knowledge of such parameters and variables) and rationality (the disposition to make decisions which tend to maximize the degree of success in reaching a goal). (shrink)

A central concern of economics is how society allocates its resources. Modern economies rely on two institutions to allocate: markets and governments. But how much of the allocating should be performed by markets and how much by governments? This collection of readings will help students appreciate the power of the market. It supplements theoretical explanations of how markets work with concrete examples, addresses questions about whether markets actually work well and offers evidence that supposed "market failures" are not as serious (...) as claimed. Featuring readings from Hayek, William Baumol, Harold Demsetz, Daniel Fischel and Edward Lazear, Benjamin Klein and Keith B. Leffler, Stanley J. Liebowitz and Stephen E. Margolis, and John R. Lott, Jr., this book covers key topics such as: • Why markets are efficient allocators • How markets foster economic growth • Property rights • How markets choose standards • Asymmetric Information • Whether firms abuse their power • Non-excludable goods • Monopolies The selections should be comprehended by undergraduate students who have had an introductory course in economics. This reader can also be used as a supplement for courses in intermediate microeconomics, industrial organization, business and government, law and economics, and public policy. (shrink)

Most philosophical accounts of the foundations of economics have assumed that economics is intended to be an empirical science concerned with human behaviour, though they have, of course, differed over the extent to which it has been or can be successful as such an enterprise. A prominent source of dissent against this consensus is Alexander Rosenberg. In his recent book, Rosenberg summarizes and completes his statement of a position that he has been developing for some time. He argues that although (...) economists evaluate one another's work according to shared and rigorous standards of adequacy, these standards are strictly internal, like those of mathematics, instead of being derived from discoveries about contingent relationships between theoretical statements and empirical facts. Economics, that is to say, is essentially conceptual rather than empirical inquiry. In the following discussion, I will provide grounds for resisting Rosenberg's conclusion. The point of this criticism, however, is not mainly negative. Most of the historical preoccupations of the philosophy of economics, like those of the philosophy of science in general, have been epistemological. Careful attention to Rosenberg's argument, however, redirects our attention to ontological questions about the objects of economics, and this redirection, I will maintain, is to be welcomed. I will argue that while the majority of philosophers of economics is correct, as against Rosenberg, in regarding economics as an empirical science, the conventional view as to the identity of its empirical objects should be substantially revised under the pressure of Rosenberg's criticisms. My critical analysis of the implications of Rosenberg's work for the ontological commitments of economics is intended to furnish one line of argument towards my own conception of the objects of economics. This conception, which is still preliminary in many respects, will be briefly sketched toward the end of the present paper; a detailed account of it is given in Ross and LaCasse. (shrink)

The standard microeconomic analysis of taxation suggests that excise taxes on goods with a price-inelastic demand are more efficient in that they lead to a lower deadweight loss than taxes on goods with price-elastic demand. This argument ignores secondary effects on the rest of the economy. By narrowly focusing on the primary effects on the market where the tax is raised, the overall deadweight loss is underestimated when demand is price-inelastic. Moreover, it is overestimated when demand is price-elastic. This (...) puts into question the validity of the standard textbook argument. In this paper we address this issue by considering how taxes affect consumer behavior in other markets. From this we can clearly see how the impact of an excise tax is not limited to one market in isolation, but is spread over all markets and affects the demand for cash balances. We suggest a simple way to incorporate this important insight into a standard textbook exposition. (shrink)

This paper examines a model in which people’s preferences adjust to changes in their relative ability to attain various goals. Preference changes are modeled as changes in the configuration of weights (or values) attached to these goals. The model permits to explain common prototype changes of preferences such as the ‘sour grapes’ or the ‘overcompensating’ phenomenon. It is found that whether the first or the second phenomenon occurs depends on whether a goal is easy or difficult to substitute by other (...) goals. If two goals are sufficiently strong substitutes for each other, no weight will be placed on that goal which is harder to attain. The results readily apply to the standard microeconomic set-up involving goods and prices, rather than abstract goals and abilities. In this case, one implication of the model is that only a subset of the overall commodity space is relevant for everyday consumer choice, which reduces the complexity of the choice procedure. The model also permits to explain how new and unfamiliar products are incorporated into the consumer’s preference pattern. (shrink)

A central point of debate over environmental policies concerns how future costs and benefits should be assessed. The most commonly used method for assessing the value of future costs and benefits is economic discounting. One often-cited justification for discounting is uncertainty. More specifically, it is risk aversion coupled with the expectation that future prospects are more risky. In this paper I argue that there are at least two reasons for disputing the use of risk aversion as a justification for discounting (...) when dealing with longterm decisions, one technical and one ethical. Firstly, I argue that technically, it implies an inconsistency between theory and practice. And secondly, I argue that discounting for uncertainty relies on a form of individualism which, while reasonable in standard microeconomic theory where an agent chooses how to spread her own consumption over her own lifetime, is inappropriate in the context of intergenerational social decisions. (shrink)

The Inexact and Separate Science of Economics offers an overview of standard microeconomics and general equilibrium theory. These are not the whole of orthodox economics, and orthodox economics is not the whole of economics. But orthodox economics dominates the profession, and the theoretical core of microeconomics and general equilibrium theory – what I called ‘equilibrium theory’ – is central to most orthodox economics. Unlike many methodological works, which focus almost exclusively on the empirical problems of equilibrium theory (...) and its applications, ISSE is also concerned with the structure, strategy and heuristics of equilibrium theorizing, and it attempts to link questions about theory appraisal to questions about structure and strategy. It is addressed both to philosophers interested in epistemological questions posed by the social sciences and to economists interested in reflecting on and improving their discipline. Its inspiration lies in the work of John Stuart Mill. (shrink)

F.M. Scherer has not effectively rebutted my subjectivist criticism of the standard microeconomic welfare model; Scherer's historical reference to what Congress (allegedly) believed is irrelevant to the theoretical concerns raised by subjectivism. Nor does my “principal” criticism of antitrust policy rests on “philosophical foundations”; my principal criticism rests on conventional economic analysis and a detailed economic history of the classic antitrust cases. My conclusion that the electrical equipment conspiracy of the late 1950s had no significant effect on market prices (...) is supported by Ralph Sultan's findings; indeed, it is Scherer who brutally ignores the context and misrepresents the general thrust of Sultan's research. Scherer's comments on OPEC confuse the distinction that I made between private and governmental cartels.Finally, the economic welfare model that Scherer embraces so enthusiastically at the start of his review cannot be so suddenly discarded when I show something inconvenient: namely, that the “dominant firms” in the classic antitrust cases did not reduce market output and did not raise market prices. Scherer has not come to grips with my central thesis that antitrust regulation has generally been employed to restrain the competitive market process. (shrink)

Throughout the twelve chapters of this book, Hollis uses ideas from economics, sociology, political theory, and philosophy to reach his central goal: decoding the meaning of rational human action. Hollis begins the development of his argument by reviewing the standard microeconomic analysis of rational choice by a single individual such as Adam. Since action is the result of desire plus belief, rational action involves ordered desires, true beliefs, correct deliberation, and the maximization of net utility. Hollis questions the assumption (...) that desire, rather than belief, is the primary motivator of action. He challenges whether a theory of merely efficient choice which disregards ends can be considered a theory of rational choice. (shrink)

The standard economic problem of optimally allocating scarce resources has, over recent decades, evolved into a set of practical and consequential policy interventions on the part of economists. Key fields of (mostly game-theoretic) microeconomics—social choice and mechanism design—have joined forces with experimental economics and, more recently, computer science to help ‘build economic machines’ (Guala 2001). In fact, a substantial share of today’s theoretical microeconomic research is directly or indirectly related to market design. It would be fair to say (...) that the field became a key driver in the development of ‘theory’ in economics. The chapter explores the emergence of market design and its major conceptual and policy achievements. It argues that this field prompts us to challenge the traditional notion of economic models as epistemic artifacts devised by scholars to solely understand the world. Market design models also serve as instruments for intervention and accompany the actual design process in a way that could be ‘performative’. The chapter reviews existing critical work on market design, which attempts to make sense of the specific cases, contexts, and conceptual/epistemic significance of market design interventions. It also reflects on research challenges and offers some general insights drawn from the survey. (shrink)

I distinguish between two styles of research that are both called . Neurocellular economics (NE) uses the modelling techniques and mathematics of economics to model relatively encapsulated functional parts of brains. This approach rests upon the fact that brains are, like markets, massively distributed information-processing networks over which executive systems can exert only limited and imperfect governance. Harrison's (2008) deepest criticisms of neuroeconomics do not apply to NE. However, the more famous style of neuroeconomics is behavioural economics in the scanner. (...) This is often motivated by complaints about conventional economics frequently heard from behavioural economists. It attempts to use neuroimaging data to justify arguments for replacing standard aspects of microeconomic theory by facts and conjectures about human psychology. Harrison's grounds for unease about neuroeconomics apply to most BES, or at least to its explicit methodology. This methodology is naively reductionist and illegitimately assumes that economics should not do what all successful science does, namely, model abstract aspects of its target phenomena instead of would-be complete and fully ecologically situated facsimiles of them. (shrink)

This present article explores the effects of cultural value, economic prosperity, and community mental wellbeing through multi-sectoral infrastructure growth projects under the Belt and Road Initiative. The implications of the social exchange theory are applied to observe the support of the local community for the China-Pakistan Economic Corridor. This study explores the CPEC initiative, it’s direct social, cultural, economic development, and risk of environmental factors that affect residents’ lives and the local community’s wellbeing. CPEC is a multibillion-dollar project to uplift (...) economic growth and free trade between Pakistan, China, and other regional stakeholders. Although CPEC is still in its initial phases with partial startups, policymakers and government officials claim this mega project as a “game-changer” in the region, mainly for Pakistan and China. This gigantic project offers the significant potential to generate business slews and employment opportunities with international outreach. Due to the term’s newness, numerous studies have recently explored the macro and microeconomic benefits of the CPEC initiatives; still, these projects are theoretical. The existing literature insufficiently explored how helpful CPEC would be to a specific group and how residents perceive its advantages. This study fills in the literature gaps and explores the likely advantageous potential of the CPEC for the regional states. The study applied a convenient sampling technique for the data collection process. It used a mixed-method approach to gain scientific results, with a standardized questionnaire survey of 459 people from five major cities of Pakistan. The study results designate that residents believe that CPEC infrastructure projects will significantly improve residents’ life quality through more job openings and community poverty reduction. Still, they raised their concerns regarding environmental protection issues in the region. The findings specified that residents had an optimistic approach to better educational productivity by adopting environment-oriented policies. Policymakers should establish new CPEC study centers in different areas, and investors should be encouraged to participate in the industrial sector. Officials can overwhelm community worries about environmental degradation. Government officials in both countries can utilize the findings to raise public awareness about CPEC’s social, economic, cultural, mental wellbeing, and ecological implications. (shrink)

⦿ In my dissertation I introduce, motivate and take the first steps in the implementation of, the project of naturalising modal metaphysics: the transformation of the field into a chapter of the philosophy of science rather than speculative, autonomous metaphysics. -/- ⦿ In the introduction, I explain the concept of naturalisation that I apply throughout the dissertation, which I argue to be an improvement on Ladyman and Ross' proposal for naturalised metaphysics. I also object to Williamson's proposal that modal metaphysics (...) --- or some view in the area --- is already a quasi-scientific discipline. -/- ⦿ Recently, some philosophers have argued that the notion of metaphysical modality is as ill defined as to be of little theoretical utility. In the second chapter I intend to contribute to such skepticism. First, I observe that each of the proposed marks of the concept, except for factivity, is highly controversial; thus, its logical structure is deeply obscure. With the failure of the "first principles" approach, I examine the paradigmatic intended applications of the concept, and argue that each makes it a device for a very specific and controversial project: a device, therefore, for which a naturalist will find no use for. I conclude that there is no well-defined or theoretically useful notion of objective necessity other than logical or physical necessity, and I suggest that naturalising modal metaphysics can provide more stable methodological foundations. -/- ⦿ In the third chapter I answer a possible objection against the in-principle viability of the project: that the concept of metaphysical modality cannot be understood through the philosophical analysis of any scientific theory, since metaphysical necessity "transcends'' natural necessity, and science only deals with the latter. I argue that the most important arguments for this transcendence thesis fail or face problems that, as of today, remain unsolved. -/- ⦿ Call the idea that science doesn't need modality, "demodalism''. Demodalism is a first step in a naturalistic argument for modal antirealism. In the fourth chapter I examine six versions of demodalism to explain why a family of formalisms, that I call "spaces of possibility'', are (i) used in a quasi-ubiquitous way in mathematised sciences (I provide examples from theoretical computer science to microeconomics), (ii) scientifically interpreted in modal terms, and (iii) used for at least six important tasks: (1) defining laws and theories; (2) defining important concepts from different sciences (I give several examples); (3) making essential classifications; (4) providing different types of explanations; (5) providing the connection between theory and statistics, and (6) understanding the transition between a theory and its successor (as is the case with quantisation). -/- ⦿ In fifth chapter I propose and defend a naturalised modal ontology. This is a realism about modal structure: my realism about constraints. The modal structure of a system are the relationships between its possible states and between its possible states and those of other systems. It is given by the plurality of restrictions to which said system is subject. A constraint is a factor that explains the impossibility of a class of states; I explain this concept further. First, I defend my point of view by rejecting some of its main rivals: constructive empiricism, Humean conventionalism, and wave function realism, as they fail to make sense of quantum chaos. This is because the field requires the notion of objective modal structure, and the mentioned views have trouble explaining the modal facts of quantum dynamics. Then, I argue that constraint realism supersedes these views in the context of Bohm's standard theory and mechanics, and underpins the study of quantum chaos. Finally, I consider and reject two possible problems for my point of view. -/- ⦿ A central concern of modal metaphysicians has been to understand the logical system that best characterises necessity. In the sixth chapter I intend to recover the logical project applied to my naturalistic modal metaphysics. Scientists and philosophers of science accept different degrees of physical necessity, ranging from purely mathematically necessary facts that restrict physical behaviour, to kinetic principles, to particular dynamical constraints. I argue that this motivates a multimodal approach to modal logic, and that the time dependence of dynamics motivates a logic of historical necessity. I propose multimodal propositional (classical) logics for Bohmian mechanics and the Everettian theory of many divergent worlds, and I close with a criticism of Williamson's approach to the logic of state spaces of dynamic systems. (shrink)

Critics of mainstream economics typically rest important weight on the differences between people and the 'agents' that populate economic theory and economic models. Hollis and Nell (1975) is both representative of and ancestral to many more recent variations on the theme. Lately, the upgraded status of behavioral economics (BE) within the discipline's mainstream has encouraged a number of writers to use revolutionary rhetoric in promotion of a 'paradigm shift' that includes the rejection of 'rational economic man' (Ormerod 1994, Heilbroner and (...) Milburg 1995, Fullbrook 2003). The current leading developers of BE are generally more circumspect, claiming that their approach complements standard theory rather than promising to supplant it (Camerer and Loewenstein 2004, Angner and Loewenstein this volume). However, they generally join the more florid critics in supposing that microeconomics is bound to improve its empirical relevance to the extent that it substitutes the study of people for that of abstract economic agents. Another body of thought that promotes this view stems from Sen's (1977) attack on standard economic agents as 'rational fools', amplified in Davis's (2003) argument that since economic agents lack some essential properties of human individuals, economic theory requires fundamental reform if it is to make progress in explaining human behavior. (shrink)

Daniel Kahneman's book Thinking, Fast and Slow (2011) has had a worldwide impact. The book's insights are profound and have changed the thinking of both decision scientists and general audiences about how choices are made. Kahneman, however, claims that standard utility theory cannot explain these insights because it 1) lacks “reference points” from which gains and losses can be measured, 2) does not predict loss aversion, and 3) assumes preferences are stable (amid supposed counter evidence). These alleged failures of (...) utility theory are what led Kahneman and Tversky (1979, 1991) to develop prospect theory. This brief article shows that a close reading of Thinking, Fast and Slow reveals fundamental oversights in these criticisms. Not only does loss aversion arise naturally within utility theory for rational economic agents with stable preferences, but the very measurements of gains and losses rely directly upon reference points. Rather than overturning the insights of prospect theory, proper use of utility theory and its indifference curve representations reveals these behavioral insights and places them within the sturdier, longer- established framework of neoclassical microeconomic theory. (shrink)

Empirical research on Rational Choice Theory has brought up two focus of the economics laws problem. On one hand, we find the authors who state that the neoclassical economics laws are explanatory and predictive on specific cases: in transparent contexts in which the standard rationality operates successfully. On the other hand, we find the authors who state that the descriptive theories of the rational choice opens up a research path in which fundamental principles of the neoclassical building could be (...) questioned. Both view points have generated an important standard Rational Choice Theory revision what has produced the so called descriptive view point. It implies understanding that most of the choices take place under risky or uncertainty conditions and, that, these choices are far more complex than the normative Rational Choice Theory supposes. This article's main goal is to expand the descriptive point of view in rational choice, theorizing how some factors, coming from the social and cultural environment, operate within the rational choice. Into space of this research essay we find the debatable question of whether these sort of proposals expands the explanation of the deviation of the rational choice normative theory, and that, of the disturbing causes of the microeconomics laws, or they call into question fundamental principles of these laws and therefore they are opening the possibility to focus some economics issues in a new different manner. (shrink)

Most of the economic models on basic income account just for pecuniary forms of work, i. e. “time spent making money”, in employment. This restriction is a drawback of these analyses and of the standard economic labor supply model itself. If one wants to understand the potential effects of basic income on individual and social welfare, one should not restrict observation to the pecuniary uses of time. The objective of this contribution is to rethink the meaning of work usually (...) applied in economic models, based on contributions of other social scientists. This reassessment is undertaken through the development of a microeconomic model, which discusses the effects of basic income on time use and interprets work not just as a source of income, but also of non-pecuniary benefits. Further, we disentangle the usual work-leisure dichotomy in two other ones. (shrink)

Corporate social responsibility (CSR) has become a ubiquitous concept. It has made inroads into morality and business opportunity. It has found the approval of global institutions. However, it still strives to make itself credible and authentic and—by the same token—to motivate the business community from a cogent theoretical point of view. There appears to be a gap in the theory that would answer a research question like: How can we reformulate CSR in order for it to be cogent from a (...) mainstream economic theory point of view?The scope of this chapter is to suggest a formulation of CSR based on mainstream self-interest and neoclassical microeconomics. The approach to theory development is deductive (from neoclassical economics principles) and inductive (based on literature review). Going back to the basics, this chapter provides a first tentative answer by identifying cogent theoretical reasons why CSR should be practiced by ‘business managers of corporations as a standard of their profession rather than a voluntary and optional initiative’. This chapter’s finding is ‘Reformulated CSR’, whose theoretical underpinning is identified in the two categories of failure: market failure and a sociology of organizations’ novel idea of ‘organizational failure’.This chapter is limited to an initial attempt to address the issue that defines a new potential research area. Future studies could also look at Reformulated CSR vis-a-vis theories of human organizational interaction and look at the role of competition and environmental stewardship. If Reformulated CSR is accepted, then CSR becomes a businesses’ duty to account for their potential conditions of failure, thus overcoming the voluntary motivation that clutters other views. At the same time, Reformulated CSR should not be confined to the business sector as it encompasses all sectors of the economy, including—notably—the public administration. Policy implications include generalized social performance reporting on the part of public administration and—of course—the corporations. (shrink)

Demand-pull inflation could be contained using standard macroeconomic tools. Non-competitive conditions in the factor market were a challenge to microeconomic policy as well. By the 1950s Meade was concerned about the power of the unions to force the economy into an unattractive combination of unacceptable price rises and avoidable unemployment, in excess of the structural or frictional minimum. The only solution to cost-push inflation was a new tool: incomes policy. It would propagate a norm in line with productivity gains (...) and would enforce it through compulsory arbitration. The level of total demand would be fixed by a pre-announced rule in such a way as to back up the norm. The market would not solve the problem. It was a surprising concession for a market liberal to make. (shrink)

Effective Altruism is a movement and a philosophy that has reinvigorated the debate about the nature of beneficence. At base, it is the consistent application of microeconomic principles to beneficent action. The movement has exposed that many forms of giving do little good (or do active harm), but others do tremendous good. Questioning Beneficence uses Effective Altruism as a launchpad to ask hard questions about beneficence more generally. Must we be Effective Altruists, or is Effective Altruism and the ideas driving (...) the movement a mistake? How much should we give and-if anything-how should we give it? What are the respective roles of different kinds of institutions? Is charity anti-democratic and do billionaire philanthropists have too much power? Is Effective Altruism just utilitarianism in disguise? Questioning Beneficence is written by four philosophers, each with distinct points of view. It introduces a new standard for debating ideas in philosophy as each author poses and answers three questions and each of his three co-authors responds to those questions in turn. Finally, the first author replies to his co-authors' responses. Throughout the book, there is a spirit of curiosity, intellectual risk taking, and truth-seeking, rather than point-scoring and one-upsmanship. Questioning Beneficence demonstrates what open-minded, real dialogue over an important issue can be at its very best. (shrink)

Economic markets are not morally free zones. Contrary to popular misconceptions, market functioning rests on the ethical principles of fairness and voluntariness. This ethical foundation can be traced back at least to moral philosopher Adam Smith, one of the founders of modern economics. In the inconspicuous form of microeconomic axioms, these moral foundations are preserved. Thus, virtually all “neo-classic” economic concepts presuppose a market ethics of fairness and voluntariness. In a world of pervasive uncertainty on the long-term development of the (...) human-environment interaction, the protection of the global life-support systems is an important test case for the scope of the ethical content of market ethics. We review risk protection strategies in the face of this uncertainty that are (i) based on the insurance effect of biological diversity, and (ii) that employ a safe minimum standard (SMS). Because the fairness principle of market ethics requires that economic agents who cause “external” costs must, at least, compensate those who are burdened with these costs, the interests of future generations have to be included in responsible economic decision-making. The market and market ethics approach is applied to the analysis of a SMS for biological diversity, and to the inherent problems of such an approach. At the microeconomic level of individual decision-making, an unconditional protection is supported by market ethics neither for the putative interests of future generations nor for biological diversity: Poor people who struggle to cover their basic needs cannot not be required to care for biological diversity. In all other cases, the protection of biological diversity in favour of future generations is supported—if costs are not “unacceptably high”. At which cost level this point is approached, market ethics is not designed to decide. (shrink)

Entrepreneurs are widely recognized for the vital contributions they make to economic growth and general welfare, yet until fairly recently entrepreneurship was not considered worthy of serious economic study. Today, progress has been made to integrate entrepreneurship into macroeconomics, but until now the entrepreneur has been almost completely excluded from microeconomics and standard theoretical models of the firm. The Microtheory of Innovative Entrepreneurship provides the framework for introducing entrepreneurship into mainstream microtheory and incorporating the activities of entrepreneurs, inventors, (...) and managers into standard models of the firm. William Baumol distinguishes between the innovative entrepreneur, who comes up with new ideas and puts them into practice, and the replicative entrepreneur, which can be anyone who launches a new business venture, regardless of whether similar ventures already exist. Baumol puts forward a quasi-formal theoretical analysis of the innovative entrepreneur's influential role in economic life. In doing so, he opens the way to bringing innovative entrepreneurship into the accepted body of mainstream microeconomics, and offers valuable insights that can be used to design more effective policies. The Microtheory of Innovative Entrepreneurship lays the foundation for a new kind of microtheory that reflects the innovative entrepreneur's importance to economic growth and prosperity. (shrink)

Philippe Fournier | : Le point de départ de ma proposition est que la responsabilité est un terme plus approprié que la vertu pour désigner les exhortations au devoir civique dans l’ère contemporaine. De même, à défaut de voir l’implication citoyenne comme l’expression de la rationalité individuelle ou de la conscience morale dans la sphère publique, je propose de comprendre la responsabilité comme une matrice discursive et gouvernementale qui perpétue des modèles comportementaux bien spécifiques. J’entends ainsi démontrer que la responsabilité (...) est devenue une modalité indispensable du « gouvernement de la conduite » au sein d’une rationalité néolibérale. En plus de constituer une série de dispositions morales qui remédierait aux failles et aux lacunes de l’individualisme libéral, la responsabilité se matérialise dans les incitations à une citoyenneté active et participe de ce fait à la rationalisation du retranchement de l’État de la sphère sociale. Comme l’illustrent des courants aussi divers que le néoconservatisme, le communautarisme et l’économie sociale, la responsabilité se présente moins comme une solution de rechange aux créneaux du néolibéralisme qu’une série de techniques et de standards comportementaux visant à compléter et renforcer l’application élargie d’une logique micro-économique. Je montrerai que le recours à la notion de responsabilité est particulièrement visible dans les politiques d’aide sociale et au sein des nouveaux partenariats entre l’État, le milieu communautaire et les communautés locales. En effet, l’aide étatique est de plus en plus conditionnelle à la démonstration de certaines dispositions morales et psychologiques comme la volonté, la ténacité et la probité. L’article se divise en quatre parties. La première s’attarde à définir brièvement la « gouvernementalité », concept initialement développé par Michel Foucault. La deuxième se penche sur des travaux plus contemporains, notamment ceux du sociologue britannique Nikolas Rose qui se préoccupe de la responsabilité en tant que modalité gouvernementale au sein du néolibéralisme. La troisième partie met en relief les particularités du néolibéralisme américain. En vue de cerner les pratiques et discours associés à la responsabilité de façon plus précise, la dernière partie examine l’un des principaux programmes d’aide sociale aux États-Unis, l’Aid to Families with Dependent Children, devenu le Temporary Assistance for Needy Families en 1996, des années 1980 jusqu’à aujourd’hui. | : Our point of departure is that responsibility is a more appropriate term than virtue to designate the contemporary exhortations to civic duty. Instead of seeing civic engagement as a means to express individual rationality or moral conscience in the public sphere, this paper suggests that we should understand responsability as a discursive and governmental matrix that perpetuates specific behavioral standards. More specifically, the article aims to show that responsability has become an indispensable instrument of rule within a neoliberal rationality of government. As well as pointing to a range of moral dispositions that can offset neoliberalism’s shortcomings, the notion of responsibility is mobilised in the repeated public calls to active citizenship and plays a strategic role in the discursive justification of the state’s withdrawal from the social sphere. As illustrated by strands of thought as diverse as neoconservatism, communitarianism and social economy, responsibility is less an alternative to neoliberal tenets than a series of techniques and behavioral standards that complement and reinforce the extension of a microeconomic logic to all spheres of human activity. The appeals to responsibility are particularly visible in contemporary social policies and in the strategic partnerships between the state, community organisations and local communities. Indeed, state assistance has become increasingly conditional on the demonstration of aptitudes and moral qualities like earnestness, tenacity and willpower. The article proceeds in four parts. The first part briefly defines governmentality, a concept initially developed by Michel Foucault. The second part explores Nikolas Rose’s work on advanced liberalism and takes a look at contemporary articulations of responsibility. The third part examines the specificities of American neoliberalism. In order to identify the practices and discourses linked to the notion of responsibility, the final part of the article looks at one of the main social programs in the United States, namely the Aid to Families with Dependent Children, renamed the Temporary Assistance for Needy Families in 1996, from the early 1980s to our day. (shrink)

Empirical research on Rational Choice Theory has brought up two focus of the economics laws problem. On one hand, we find the authors who state that the neoclassical economics laws are explanatory and predictive on specific cases: in transparent contexts in which the standard rationality operates successfully. On the other hand, we find the authors who state that the descriptive theories of the rational choice opens up a research path in which fundamental principles of the neoclassical building could be (...) questioned. Both view points have generated an important standard Rational Choice Theory revision what has produced the so called descriptive view point . It implies understanding that most of the choices take place under risky or uncertainty conditions and, that, these choices are far more complex than the normative Rational Choice Theory supposes. This article's main goal is to expand the descriptive point of view in rational choice, theorizing how some factors, coming from the social and cultural environment, operate within the rational choice. Into space of this research essay we find the debatable question of whether these sort of proposals expands the explanation of the deviation of the rational choice normative theory, and that, of the disturbing causes of the microeconomics laws, or they call into question fundamental principles of these laws and therefore they are opening the possibility to focus some economics issues in a new different manner. (shrink)

The case of Twin B involves the decision to send a newborn to a less intensive Level 2 special care nursery (SCN) than to the Level 3 neonatal intensive care unit (NICU) that is considered optimal by the physician. The physician’s acceptance of the transfer is against the child’s best interest and is due to parental convenience. In analyzing the case, we reject the best interest standard. Our rejection is partly supported by the views of Douglas Diekema, John Hardwig, (...) and Lannie Ross. Instead of the best interest standard, we offer and defend an approach we base on a microeconomic analysis of externalities, such as those involved with automobile emissions. This extends our previously presented general microeconomic approach to patient decision-making. It provides a clearer way to evaluate situations, like those of Twin B, in which burdens faced by family members may be used to determine the appropriate level of treatment for a decisionally incapable patient. (shrink)

Rosenberg applies current thinking in philosophy of science to neoclassical economics in order to assess its claims to scientific standing. Although philosophers have used history and psychology as paradigms for the examination of social science, there is good reason to believe that economics is a more appropriate subject for analysis: it is the most systematized and quantified of the social sciences; its practitioners have reached a measure of consensus on important aspects of their subject; and it encompasses a large number (...) of apparently law-like propositions. (shrink)

Robert Frank’s Microeconomics and Behavior covers the essential topics of microeconomics while exploring the relationship between economics analysis and human behavior. The book’s clear narrative appeals to students, and its numerous examples help students develop economic intuition. This book introduces modern topics not often found in intermediate textbooks. Its focus throughout is to develop a student’s capacity to “think like an economist.”.

Microeconomic Theory is based on lecture notes for a graduate course in microeconomic theory. It covers a broad range of topics, and to some extent the lecture structure is retained in the style of the book. The author provides a clear account of the main ideas in each area concisely, and in some depth of detail. The presentation is at an advanced level and provides succinct coverage of the material in a self contained discussion. Chapters are organized and written independently (...) making it possible to read any chapter without having read earlier material. Each chaper is written on the presumption that the reader has some familiarity with the topics or issues under discussion but would value further discussion, or a second point of view. While much of the material is mainstream, a substantial portion is not available in existing textbooks. The book covers a range of topics appearing in advanced courses in microeconomic theory. Coverage includes such topics as decision theory, strategic and extensive form games, auctions, bargaining, information models, principal- agent problems, signalling and screening games, cooperative games and models of learning. (shrink)

This paper is part of a larger project defending of the foundations of microeconomics against recent criticisms by philosophers. Here, we undermine one source of these criticisms, arising from philosophers' disappointment with the performance of microeconomic tools, in particular game theory, when these are applied to normative decision theory. Hollis and Sugden have recently articulated such disappointment in a sophisticated way, and have argued on the basis of it that the economic conception of rationality is inadequate. We argue, however, (...) that their claim rests upon a misunderstanding of the concept of a game as it is used in microeconomics. (shrink)

This comment on 'Economic theories and their Dueling interpretations' questions the descriptive adequacy of the ‘sociology of economics' proposed by Gilboa, Postlewaite, Samuelson, and Schmeidler (GPSS) (2022). We ask whether economists still perceive the role of microeconomic theory as central as do GPSS. In particular, is present-day economics unified by the principles of maximising, subject to constraints and equilibrium analysis? We argue that this is not the case. GPSS’ appeal to the interpretative flexibility of economic theories appears apologetic, especially the (...) suggestion that theories and models, which once were considered positive descriptions or predictive instruments, are now cast as analytical or methodological exercises. We conclude on a more constructive note, drawing from the recent philosophical discussion of modelling which, quite paradoxically, grants highly idealized and simplified models a more important role than GPSS appear to allow. (shrink)

This book presents Ariel Rubinstein's lecture notes for the first part of his well-known graduate course in microeconomics.

This is the first full-length survey of current work which examines the compatibility of microeconomics and macroeconomics. Its particular distinction is that it makes accessible, to non-specialists, those extensive modern refinements of general equilibrium theory which are linked to macroeconomics and monetary theory. Part I traces the development and interlocking nature of two scientific research prgrams, macroeconomics and neo-Walrasian analysis. The five chapters in this part examine general equilibrium theory, Keynes' contribution, the 'neoclassical synthesis', and the Clower–Leijonhufvud contributions to (...) questions of systemic coordination. The four chapters of Part II place recent work on the micro-foundations of macroeconomics within a taxonomic scheme of Walrasian equilibrium, Walrasian disequilibrium, Edgeworthian equilibrium, and Edgeworthian disequilibrium. Part III, a single chapter, provides an overview of the subject and ventures some conclusions. (shrink)

In recent years, the project of providing microeconomic foundations for macroeconomics has taken on new urgency. Some philosophers and economists have challenged the project, both for the way economists actually approach microfoundations and for more general anti-reductionist reasons. Reductionists and anti-reductionists alike, however, have taken it to be trivial that the macroeconomic facts are exhaustively determined by microeconomic ones. In this paper, I challenge this supposed triviality. I argue that macroeconomic properties do not even globally supervene on microeconomic ones. This (...) is simply a consequence of the difference in the explanatory goals of the respective fields, which implicitly carve out the microeconomic property set in such a way that it underdetermines macroeconomic properties. It means, however, that microeconomics-based foundations for macroeconomics are inadequate in principle. (shrink)

We summarize the evidence and arguments usually employed against the use of the profit maximization assumption in microeconomic theory, and then pass directly to the methodological arguments. Two arguments are considered. The first summarizes positions which have been taken by various defenders of the "people who think a theory should be given up just because it is false are naive and confused" view. To rebut this view, we develop a scheme for classifying theoretical assumptions and show that the specious plausibility (...) of the argument in question derives from ignoring the distinctions we have drawn. The second argument attempts to show that a better theory is more likely to be attained by continuing the development of the orthodox theory. We show that this view is mistaken and then discuss steps which have been taken to develop a better theory. (shrink)

Economics without Preferences lays out a new microeconomics – a theory of choice behavior, markets, and welfare – when agents lack the preferences and marginal judgments that economics normally relies on. Agents without preferences defy the rules of the traditional model of rational choice but they can still systematically pursue their interests. The theory that results resolves several puzzles in economics. Status quo bias and other anomalies of behavioral economics shield agents from harm; they are expressions rather than violations (...) of rationality. Parts of economic orthodoxy go out the window. Agents will fail to make the fine-grained trade-offs between options ingrained in conventional economics, leading market prices to be volatile and cost-benefit analysis to break down. This book provides policy alternatives to fill this void. Governments can spur innovation, the main benefit markets can deliver, while sheltering agents from the upheavals that accompany economic change. (shrink)