Philosophy of Economics

In this paper, I argue for a new normative theory of rational choice under risk, namely expected comparative utility (ECU) theory. I first show that for any choice option, a, and for any state of the world, G, the measure of the choiceworthiness of a in G is the comparative utility (CU) of a in G—that is, the difference in utility, in G, between a and whichever alternative to a carries the greatest utility in G. On the basis of this (...) principle, I then argue that for any agent, S, faced with any decision under risk, S should rank his or her decision options (in terms of how choiceworthy they are) according to their comparative expected comparative utility (CECU) and should choose whichever option carries the greatest CECU. For any option, a, a's CECU is the difference between its ECU and that of whichever alternative to a carries the greatest ECU, where a's ECU is a probability-weighted sum of a's CUs across the various possible states of the world. I lastly demonstrate that in some ordinary decisions under risk, ECU theory delivers different verdicts from those of standard decision theory. (shrink)

Molti esperti concordano sul fatto che la pandemia di Covid-19 sia l'occasione giusta per iniziare a tassare l’anidride carbonica, ora che la domanda e quindi anche il prezzo dei combustibili fossili sono scesi. Tuttavia, la carbon tax continua ad essere vista con sospetto, soprattutto tra i progressisti, che temono che questa misura abbia effetti regressivi. Allo stesso tempo, i sostenitori di una carbon tax a entrate positive, che finanzi investimenti in progetti ecologici, rischiano di allarmare eccessivamente l’elettorato conservatore. In questo (...) articolo, sostengo dunque che una carbon tax neutra dal punto di vista delle entrate e che miri a ridurre il cuneo fiscale può combinare gli obiettivi redistributivi della sinistra europea, la lotta contro il cambiamento climatico e un’ampia accettabilità sociale. Tuttavia, il modo in cui la carbon tax viene proposta deve essere invertito: non più “mitigare il cambiamento climatico e così facendo raggiungere anche un secondo obiettivo sociale (in questo caso l'aumento del reddito salariale)”, ma “raggiungere un certo obiettivo sociale attraverso la tassazione dell’anidride carbonica”. (shrink)

The standard version of sufficientarianism maintains that providing people with enough, or as close to enough as is possible, is lexically prior to other distributive goals. This article argues that this is excessive - more than distributive justice allows - in four distinct ways. These concern the magnitude of advantage, the number of beneficiaries, responsibility and desert, and above-threshold distribution. Sufficientarians can respond by accepting that providing enough unconditionally is more than distributive justice allows, instead balancing sufficiency against other considerations.

John Maynard Keynes’s A Treatise on Probability is the seminal text for the logical interpretation of probability. According to his analysis, probabilities are evidential relations between a hypothesis and some evidence, just like the relations of deductive logic. While some philosophers had suggested similar ideas prior to Keynes, it was not until his Treatise that the logical interpretation of probability was advocated in a clear, systematic and rigorous way. I trace Keynes’s influence in the philosophy of probability through a heterogeneous (...) sample of thinkers who adopted his interpretation. This sample consists of Frederick C. Benenson, Roy Harrod, Donald C. Williams, Henry E. Kyburg and David Stove. The ideas of Keynes prove to be adaptable to their diverse theories of probability. My discussion indicates both the robustness of Keynes’s probability theory and the importance of its influence on the philosophers whom I describe. I also discuss the Problem of the Priors. I argue that none of those I discuss have obviously improved on Keynes’s theory with respect to this issue. (shrink)

Critical theory has long resisted the notion that an “invisible hand” can operate within the real social dynamics of a free market. But despite the most radical desires of the socially critical imagination, the optimization of that “spontaneous order” or depersonalized way of ordering things known as “the economy” has become the dominant playing field and decisive electoral issue of modern politics. Within this broad contemporary context, Michel Foucault made a strange theoretical intervention that, to this day, continues to baffle (...) readers. During a lecture, he argued that Adam Smith’s invisible hand was, after all, truly and purposively, that is, for technical rather than ideological reasons, “invisible.” This article argues that there is a counter-positivism or tactical irony contained within the logic of such a controversial thesis; namely, that when one acknowledges that the principle of economic competition encourages an efficient self-organizing effect at all times, regardless of context, one is also immediately in a position to appreciate why the art of government should always maintain its political primacy over the spontaneous order of the market. (shrink)

According to lexical views in population axiology, there are good lives x and y such that some number of lives equally good as x is not worse than any number of lives equally good as y. Such views can avoid the Repugnant Conclusion without violating Transitivity or Separability, but they imply a dilemma: either some good life is better than any number of slightly worse lives, or else the ‘at least as good as’ relation on populations is radically incomplete, in (...) a sense to be explained. One might judge that the Repugnant Conclusion is preferable to each of these horns and hence embrace an Archimedean view. This is, roughly, the claim that quantity can always substitute for quality: each population is worse than a population of enough good lives. However, Archimedean views face an analogous dilemma: either some good life is better than any number of slightly worse lives, or else the ‘at least as good as’ relation on populations is radically and symmetrically incomplete, in a sense to be explained. Therefore, the lexical dilemma gives us little reason to prefer Archimedean views. Even if we give up on lexicality, problems of the same kind remain. (shrink)

In this article, I firstly discuss the person-affecting view of harm, distinguishing between the liability and the structural models of responsibility, and also explaining why it is unsatisfactory, from a moral point of view, to interpret a given harm as a loss with respect to a diachronic baseline. Then, I take sweatshops as an example and I entertain two further issues that are related to the assessment of harm and that are necessary for operationalising a comprehensive model of responsibility, that (...) takes into account both liability and structural injustice. The first one is how to interpret harm when it is coexistent with a diachronic benefit and/or the parties involved in the social structures leading to harm seek to unload their responsibility by hiding behind a cooperative deadlock. The second one is how far along the chain of actions leading to harm can structural responsibility be extended. (shrink)

The lifting of lockdown is a typical case of the tragedy of the commons, and as such should be regulated by public authority, instead of being left to the ethics and responsibility of single individuals. I would therefore argue that we should think about an intermediate phase between the lockdown and the opening of shops (which in the Italian case is the transition from the red zone to the orange zone): diversified access to commercial activities, on an hourly basis, for (...) different population groups. This can be achieved either by creating different opening hours for different commercial activities and offices, or by opening them all at the same time but introducing free entrance hours based on age groups of clients. Both solutions would imply an extension of business and office hours, contrary to what has happened in most countries, where an attempt has been made to shorten the days and in some cases, such as in Italy, a curfew has even been introduced at a certain time of the day (in Italy, at 10 pm). (shrink)

The paper advances a new comprehensive complex approach to the investigation of the civilizational aspects in the development of regional associations of countries. The research starts with the overview of historical dimensions of the civilizational approach and the contribution of the founding scholars to its development. It continues with the analysis of the scientific and methodological input of the followers and the critics of this approach. The authors suggest their theoretical approach to the identification of the modern local civilizations according (...) to six parameters: natural, biological, technical, economic, social, and governing. The civilizational affiliation of countries and the civilizational structure of major 17 regional associations of countries are identified. The results demonstrate that some regional groups have been more homogeneous in terms of civilizational composition, others – less homogeneous, which does not interfere with their dynamic development. However, the logic of the historical dynamics of human development indicates the inevitability of changing the current situation through prolonged civilizational conflicts resulting in significant changes in the global social dynamics and the civilizational structure of the world and of regional associations of countries. The identification of the civilization structure of countries and regional associations contributes to the rational decision-making in the areas of international economic relations and to the formation of the integration/disintegration policies on the national and regional levels. It is predicted that from 2030 global social dynamics will undergo a fundamental breakthrough that will radically change the civilizational structure of the world and regional unions of countries. Methods. The research is based on the application of the systemic and historical approach, combined with the methods of analysis, synthesis, analogy, abstraction, generalization and method of individual expert assessment. Novelty of the research. The authors have identified the civilizational structure of countries using statistically available criteria for the six groups of factors, which allows to determine the homogeneity level of the major regional groups of countries. Practical significance. Identification of civilization structure of countries and regional associations creates the opportunity for adjusting national and subregional integration and disintegration policies. The aim of the study is to determine the civilizational structure of the regional associations of countries. To achieve this goal the following tasks are set and solved: –to analyze and optimize the existing approaches to the identification of local civilizations; –to identify the current state of the countries’ belonging to this or that civilization, their civilizational structure; –to reveal the civilizational structure of the major regional blocs. (shrink)

The article analyzes the phenomenon of ownership in its legal, economic, political and philosophical perspectives. Ownership is considered as an opportunity and as a guarantee of sustainable development. Comparative context is used to identify the specificity of the bourgeois model of owners’ power (social state) and the domestic concept of power-ownership (including socialist state). The author draws conclusions about ways to overcome the competition between the state and the market for the human resource and proposes to explore the ideological provision (...) of power-ownership in order to appreciate its progressive potential and predilection in relation to the liberal model of social development . (shrink)

The economy is based on the prevailing legal system; however, the economy could go into a tailspin if the laws lose their impartiality. A perfect worker creates infinite high value with limited cost, and the result is a perfect product, usually eternal knowledge. However, free access to their products discourages workers, causing a substantial deviation from optimal resource allocation, and thereby making the supply of perfect products seriously inadequate. This significantly hurts the interests of future society. To maximize the overall (...) interests of humankind, the best policy would be to produce perfect products expeditiously, which in turn requires correcting the value society places on perfect products to respect the interests of perfect workers and future generations. Future society should essentially buy licenses from perfect workers instead of lending money to modern society for consumption. Then, the one-way trade between the present and the future will greatly increase. New companies and services will emerge around perfect products, and long-term economic growth rates will increase significantly. (shrink)

Volume 26, Issue 4, December 2019, Page 380-384.

Whereas many others have scrutinized the Allais paradox from a theoretical angle, we study the paradox from an historical perspective and link our findings to a suggestion as to how decision theory could make use of it today. We emphasize that Allais proposed the paradox as a normative argument, concerned with ‘the rational man’ and not the ‘real man’, to use his words. Moreover, and more subtly, we argue that Allais had an unusual sense of the normative, being concerned not (...) so much with the rationality of choices as with the rationality of the agent as a person. These two claims are buttressed by a detailed investigation – the first of its kind – of the 1952 Paris conference on risk, which set the context for the invention of the paradox, and a detailed reconstruction – also the first of its kind – of Allais’s specific normative argument from his numerous but allusive writings. The paper contrasts these interpretations of what the paradox historically represented, with how it generally came to function within decision theory from the late 1970s onwards: that is, as an empirical refutation of the expected utility hypothesis, and more specifically of the condition of von Neumann–Morgenstern independence that underlies that hypothesis. While not denying that this use of the paradox was fruitful in many ways, we propose another use that turns out also to be compatible with an experimental perspective. Following Allais’s hints on ‘the experimental definition of rationality’, this new use consists in letting the experiment itself speak of the rationality or otherwise of the subjects. In the 1970s, a short sequence of papers inspired by Allais implemented original ways of eliciting the reasons guiding the subjects’ choices, and claimed to be able to draw relevant normative consequences from this information. We end by reviewing this forgotten experimental avenue not simply historically, but with a view to recommending it for possible use by decision theorists today. (shrink)

Preference relations are intensively studied in Economics, but they are also approached in AI, Knowledge Representation, and Conceptual Modelling, as they provide a key concept in a variety of domains of application. In this paper, we propose an ontological foundation of preference relations to formalise their essential aspects across domains. Firstly, we shall discuss what is the ontological status of the relata of a preference relation. Secondly, we investigate the place of preference relations within a rich taxonomy of relations (e.g. (...) we ask whether they are internal or external, essential or contingent, descriptive or nondescriptive relations). Finally, we provide an ontological modelling of preference relation as a module of a foundational (or upper) ontology (viz. OntoUML). The aim of this paper is to provide a sharable foundational theory of preference relation that foster interoperability across the heterogeneous domains of application of preference relations. (shrink)

This paper considers the relevance of the Duhem-Quine thesis in economics. In the introductory discussion which follows, the meaning of the thesis and a brief history of its development are detailed. The purpose of the paper is to discuss the effects of the thesis in four specific and diverse theories in economics, and to illustrate the dependence of testing the theories on a set of auxiliary hypotheses. A general taxonomy of auxiliary hypotheses is provided to demonstrate the confounding of auxiliary (...) hypotheses with the testing of economic theory. (shrink)

Mill (1872, 1874) is an early proponent of the thesis that economics has a special domain in which it can operate relatively independently of findings from other sciences. Contra Mill, I argue that this so-called separateness-thesis is best defendedunder an externalist interpretation of Rational Choice Theory (RCT). Mill’s defence is consistent with an internalist interpretation of RCT. Internalism holds that RCT depicts psychological mechanisms operating in economic agents. I argue that such a defence fails to establish separateness, because it makes (...) economics highly depended on psychological findings. However, externalism understands RCT as an adequate description of how agents react to incentives if certain environmental structures are present. Under this interpretation, we can defend separateness by investigating which features of an environmental structure will lead agents to behave in accordance with RCT. Thereby, we can derive indicators that enable us to demarcate a separate domain for economics. (shrink)

Book Reviews Brian Epstein, Economics and Philosophy, FirstView Article.

This paper addresses the issue of finite versus countable additivity in Bayesian probability and decision theory -- in particular, Savage's theory of subjective expected utility and personal probability. I show that Savage's reason for not requiring countable additivity in his theory is inconclusive. The assessment leads to an analysis of various highly idealised assumptions commonly adopted in Bayesian theory, where I argue that a healthy dose of, what I call, conceptual realism is often helpful in understanding the interpretational value of (...) sophisticated mathematical structures employed in applied sciences like decision theory. In the last part, I introduce countable additivity into Savage's theory and explore some technical properties in relation to other axioms of the system. (shrink)

An examination of Emmanuel Levinas’ writings on money reveals his distance from—and indebtedness to—a philosophical predecessor, Georg Simmel. Levinas and Simmel share a phenomenological approach to analyses of the proximity of the stranger, the importance of the face, and the interruption of the dyadic relationship by the third. Money is closely linked to the conception of totality because money is the medium that compares heterogeneous values. Levinas goes beyond Simmel in positing an ethical relation to money permitting transcendence.

We consider a case where consumers are faced with a choice between sweatshop-produced clothing and identical clothing produced in high-income countries. We argue that it is morally better for consumers to purchase clothing produced in sweatshops and then to compensate sweatshop workers for the difference between their actual wage and a fair wage than it is for them either to purchase the sweatshop clothing without this compensatory transfer or to purchase clothing produced in high-income countries.

This dissertation undertakes a philosophical analysis of “natural capital” and argues that this concept has prompted economists to view nature in a radically novel manner. Formerly, economists referred to nature and natural products as a collection of inert materials to be drawn upon in isolation and then rearranged by human agents to produce commodities. More recently, however, nature is depicted as a collection of active, modifiable, and economically valuable processes, often construed as ecosystems that produce marketable goods and services gratis. (...) Nature consists of various unproduced mechanisms or “natural machines” that are first discovered and then channeled so as to serve human ends. In short, nature as an ideal is a kind of garden that is characterized by natural objects purposefully arranged by intentional human agents. (shrink)

The game theoretic notion of best-response reasoning is sometimes criticized when its application produces multiple solutions of games, some of which seem less compelling than others. The recent development of the theory of team reasoning addresses this by suggesting that interacting players in games may sometimes reason as members of a team – a group of individuals who act together in the attainment of some common goal. A number of properties have been suggested for team-reasoning decision-makers’ goals to satisfy, but (...) a few formal representations have been discussed. In this paper we suggest a possible representation of these goals based on the notion of mutual advantage. We propose a method for measuring extents of individual and mutual advantage to the interacting decision-makers, and define team interests as the attainment of outcomes associated with maximum mutual advantage in the games they play. (shrink)

in recent years, policy makers have shown increasing interest in implementing policies aimed at promoting individual well-being. But how should policy makers choose their well-being policies? a seemingly reasonable first step is to settle on an agreed-upon definition of well-being. yet there currently is significant disagreement on how well-being ought to be characterized, and agreement on the correct view of well-being does not appear to be forthcoming. Nevertheless, i argue in this paper that there are several reasons to think that (...) the domain of well-being in the public policy context is narrower than that of well-being in general, which makes agreement on how to understand well-being in the public policy context more likely. (shrink)

In the present paper, on the basis of the theory of production principles and production revolutions, we reveal the interrelation between K-waves and major technological breakthroughs in history and make forecasts about features of the sixth Kondratieff wave in the light of the Cybernetic Revolution that, from our point of view, started in the 1950s. We assume that the sixth K-wave in the 2030s and 2040s will merge with the final phase of the Cybernetic Revolution (which we call a phase (...) of self-regulating systems). This period will be characterized by the breakthrough in medical technologies which will be capable to combine many other technologies into a single complex of MANBRIC-technologies (med-bio-nano-robo-info-cognitive technologies). The article offers some forecasts concerning the development of these technologies. (shrink)

One widely used method for allocating health care resources involves the use of cost-effectiveness analysis (CEA) to rank treatments in terms of quality-adjusted life-years (QALYs) gained. CEA has been criticized for discriminating against people with disabilities by valuing their lives less than those of non-disabled people. Avoiding discrimination seems to lead to the ’QALY trap’: we cannot value saving lives equally and still value raising quality of life. This paper reviews existing responses to the QALY trap and argues that all (...) are problematic. Instead, we argue that adopting a moderate form of prioritarianism avoids the QALY trap and disability discrimination. (shrink)

This article is a critical survey of the debate over the value of the social discount rate, with a particular focus on climate change. The ma- jority of the material surveyed is from the economics rather than from the philosophy literature, but the emphasis of the survey itself is on founda- tions in ethical and other normative theory rather than highly technical details. I begin by locating the standard approach to discounting within the overall landscape of ethical theory, and explaining (...) the assumptions and simplifications that are needed in order to arrive at the model that is standard in the discounting literature. The article then covers the general theory of the Ramsey equation and its relationship to observed interest rates, arguments for and against a positive rate of pure time preference, the consumption elasticity of utility, and the effect of various sorts of uncertainty on the discount rate. Finally, it turns specifically to the ap- plication of this debate to the case of climate change, focussing on the recent controversy over the low discount rate used in the Stern Review of the Economics of Climate Change. (shrink)

“Philosophy isn’t useful for changing the world,” parents of philosophy students and Karl Marx tell us (at least about non-Marxist philosophy). Cristina Bicchieri’s new book Norms in the Wild provides an impressive antidote against this worry. It stands to change of social practices as Che Guevara’s Guerrilla Warfare stands to political revolutions. Bicchieri combines hands-on advice on how to change social practices with compelling theoretical analyses of social norms. She draws heavily on her influential earlier work on norms, but the (...) book doesn’t presuppose familiarity with it. Many of her examples stem from her work with UNICEF and other NGOs; they include female genital cutting, open defecation, child marriage, and many more. I cannot do full justice to Bicchieri’s rich book here, but will instead focus on three points. 1. Bicchieri offers a detailed and helpful botanization of collective behavior. Purely behavioral definitions of the relevant categories are inadequate. We must look at preferences and beliefs in order to know, e.g., whether something is a social norm. 2. Intentionally changing social norms is a complex process that requires several steps and extensive diagnostics. Simple information campaigns or provision of resources are unlikely to be successful. 3. Trendsetters and scripts often play a crucial role in norm change. Any approach that doesn’t look at psychological mechanisms and variables that are unevenly distributed across the population is inadequate. (shrink)

Neuroeconomics illustrates our deepening descent into the details of individual cognition. This descent is guided by the implicit assumption that “individual human” is the important “agent” of neoclassical economics. I argue here that this assumption is neither obviously correct, nor of primary importance to human economies. In particular I suggest that the main genius of the human species lies with its ability to distribute cognition across individuals, and to incrementally accumulate physical and social cognitive artifacts that largely obviate the innate (...) biological limitations of individuals. If this is largely why our economies grow, then we should be much more interested in distributed cognition in human groups, and correspondingly less interested in individual cognition. We should also be much more interested in the cultural accumulation of cognitive artefacts: computational devices and media, social structures and economic institutions. (shrink)

There is a long-standing debate in philosophy about whether it is morally permissible to harm one person in order to prevent a greater harm to others and, if not, what is the moral principle underlying the prohibition. Hypothetical moral dilemmas are used in order to probe moral intuitions. Philosophers use them to achieve a reflective equilibrium between intuitions and principles, psychologists to investigate moral decision-making processes. In the dilemmas, the harms that are traded off are almost always deaths. However, the (...) moral principles and psychological processes are supposed to be broader than this, encompassing harms other than death. Further, if the standard pattern of intuitions is preserved in the domain of economic harm, then that would open up the possibility of studying behaviour in trolley problems using the tools of experimental economics. We report the results of two studies designed to test whether the standard patterns of intuitions are preserved when the domain and severity of harm are varied. Our findings show that the difference in moral intuitions between bystander and footbridge scenarios is replicated across different domains and levels of physical and non-physical harm, including economic harms. (shrink)

This book is a collection and reworking of research done by Pascal Salin since around 1990. Salin is an economist in the tradition of the Austrian school of economics. He emphasizes the centrality of individual choice in an uncertain world in which individual actions interact to produce spontaneous orders. But he is no mere conduit of established ideas. He also offers his own highly original insights honed after a lifetime as an economist, one who has earned the respect in which (...) he is now held by his peers worldwide. The book makes delightful reading. Salin covers a lot of ground in this book, mostly within the topics indicated by the title, though in the final two chapters he goes beyond these and into the foundations of economic science. The book is divided into five parts: (1) firms, markets and competition, (2) globalization and international economic problems, (3) monetary integration, (4) money, finance and economic policies, and (5) foundations of economic theory. (shrink)

Economics claims to be an independent empirical social science but empirical evidence of the last century challenges this claim. By contrast Caritas in Veritate contains a set of linkages that demonstrate that economics is related to morals, anthropology and theology. Economics is practiced in a cultural setting with a moral dimension related to the human person, which is ultimately grounded in the nature of God. Pope Benedict has focused on love and gift as human qualities reflecting the Divine nature. The (...) anthropology that proceeds from this is a development of Pope John Paul II’s emphasis on human dignity and freedom. It suggests moral principles that can guide culture, social institutions and hence economic action. Pope Benedict uses his reflections on the social order to comment on the problems of development for less developed peoples, but his analysis also completes one theme of the social encyclicals. Whereas Pope Leo XIII concentrated on economic and political fundamentals such as property and political organization, subsequent contributions turned attention more towards the human actor in relationship to God. Pope John Paul II made this explicit by turning attention to anthropology. Pope Benedict has connected these and completed the vision initiated by his immediate predecessor. He has described more completely the grounding of anthropology on the family, culture and ultimately the Most Blessed Trinity. The encyclical can be read as an invitation to a broader methodology for economics, one that is better conformed to actual market actors and that has the capacity to overcome some of the contentious aspects of the current discipline. The groundwork has been established by thinkers including Aristotle and St. Thomas Aquinas and some of its elements are evident in the economic organisation of many non-modern cultures. (shrink)

My philosophical case study concerns textbook presentations of the theory of demand. Does this theory contain anything more than just a collection of tautologies? In order to determine its empirical content, it must be viewed holistically. But then, the theory implies false factual claims. We can avoid this result by embracing the theory's normative character. The resulting consequences will be illuminated with the new autodetermination thesis recently proposed in the philosophy of physics by Oliver Timmer. Applying his ideas to the (...) theory of demand reveals that the statements of this discipline simultaneously concern both values and acts. (shrink)

This essay is my review of economist Mark Skousen’s book, The Big Three in Economics. In it, he discusses the economic work of Adam Smith, Karl Marx, and John Maynard Keynes. He gives even-handed treatments of the major contributions of each, for example, Smith’s reputation refutation of mercantilist policies and Smith’s crucial insight into the role that division of labor plays in economic growth. My only complaint is that Skousen doesn’t adequately explain his choice of Marx as a great economist. (...) What enduring contributions did he make to the field? Why name him rather than (say) David Ricardo? (shrink)

Millikan's famous oil drop experiment is scrutinized from the viewpoint of the methodological dicta of the credibility revolution.

In this article we introduce the reader to the reasons that led to this collection: an interdisciplinary exploration aimed at renewing interest in Luigi Einaudi’s search for «good government», broadly understood as «good society». Prompted by the Einaudian quest, the essays – exploring philosophy of law, economics, politics and epistemology – develop the issue of good government in several forms, including the relationship between public and private, public governance, the question of freedom and the complexity of the human in contemporary (...) societies. The common thread of these essays is that problematic but indissoluble knot that tells us something deeply human: our being torn between homing and roaming, institutional and individual, law and freedom, real and ideal. (shrink)

We defend a view according to which Austrian economics rests on what can most properly be called an Aristotelian methodology. This implies a realist perspective, according to which the world exists independently of our thinking and reasoning activities; an essentialist perspective, according to which the world contains certain simple essences or natures which may come together in law-like ways to form more complex static and dynamic wholes, and an apriorist perspective, according to which given essences and essential structures are intelligible, (...) in the sense that they ca be grasped non-inductively in our thinking. We show the consequences of this view for an analysis of the thinking of Mises and Hoppe, both of which – we claim – incorporate what we believe to be foreign mixtures of Kantianism in their account of the foundations of Austrian economics. (shrink)

The paper revisits the rationality principle from the particular perspective of the unity of social sciences. It has been argued that the principle was the unique law of the social sciences and that accordingly there are no deep differences between them (Popper). It has also been argued that the rationality principle was specific to economics as opposed to the other social sciences, especially sociology (Pareto). The paper rejects these opposite views on the grounds that the rationality principle is strictly metaphysical (...) and does not have the logical force required to deliver interesting deductions. Explanation in the social sciences takes place at a level of specialization that is always higher than that of the principle itself. However, what is peculiar about economics is that it specializes the explanatory rational schemes to a degree unparalleled in history and sociology. As a consequence, there is a backward-and-forward move between specific and general formulations of rationality that takes place in economics and has no analogue in the other social sciences. (shrink)

According to Popper's rationality principle, agents act in the most adequate way according to the objective situation. I propose a new interpretation of the rationality principle as consisting of an idealization and two abstractions. Based on this new interpretation, I critically discuss the privileged status that Popper ascribes to it as an integral part of all social scientific models. I argue that as an idealization, the rationality principle may play an important role in the social sciences, but it also has (...) inherent limitations that inhibit it from having the privileged status that Popper ascribes to it in all cases. (shrink)

We analyze the properties of optimum portfolios, the price of which is considered a new quantum variable and derive a quantum analog of the Black-Scholes formula for the price of financial variables in assumption that the market dynamics can by considered as its continuous weak measurement at no-arbitrage condition.

The problem of measurement in economic models and the possibility of their quantum-mechanical description are considered. It is revealed that the apparent paradox of such a description is associated with a priori requirement of conformity of the model to all the alternatives of free choice of the observer. The measurement of the state of a trader on a stock exchange is formally defined as his responses to the proposals of sale at a fixed price. It is shown that an analogue (...) of Bell's inequalities for this measurement model is violated at the most general assumptions related to the strategy of the trader and requires a quantummechanical description of the dynamics of his condition. In the framework of the theory of weak continuous quantum measurements, the equation of stock price dynamics and the quantum-mechanical generalization of the F. Black and M. Scholes model for pricing options are obtained. The fundamental distinctions between the obtained model and the classical one are discussed. (shrink)