This book is an examination of the nature of economic explanation. The opening chapters introduce current thinking in the philosophy of science and review the literature on methodology. Professor Blaug then turns to the troublesome question of the logical status of welfare economics, giving the reader an understanding of the outstanding issues in the methodology of economics. This is followed by a series of case studies of leading economic controversies, which shows how controversies in economics may be illuminated by paying (...) attention to questions of methodology. A final chapter draws the strands together and gives the author's view of what is wrong with modern economics. This book is a revised and updated edition of a classic work on the methodology of economics, in which Professor Blaug develops his discussion of the latest developments in macroeconomics, general equilibrium theory and international trade theory. A new section on the rationality postulate is also added. (shrink)

This article described three heuristics that are employed in making judgements under uncertainty: representativeness, which is usually employed when people are asked to judge the probability that an object or event A belongs to class or process B; availability of instances or scenarios, which is often employed when people are asked to assess the frequency of a class or the plausibility of a particular development; and adjustment from an anchor, which is usually employed in numerical prediction when a relevant value (...) is available. These heuristics are highly economical and usually effective, but they lead to systematic and predictable errors. A better understanding of these heuristics and of the biases to which they lead could improve judgements and decisions in situations of uncertainty. (shrink)

The study analyzes Mises‘s approach to the question of apriorism in a broader methodological context. It shows that it is not inevitable to advocate the aprioristic character of economics (resp. science of human action), as Mises does, to maintain the subjectivist-individualist methodology and the effort to adequately grasp the general laws of human action from its perspective. The present redefinition of apriorism is developed on the basis of thoughts of Barry Smith and Alfred Schutz. It suggests abandoning the apodictic character (...) of apriori (which is untenable) and move closer to a broadly defined empiricism. The methodological insights developed in the paper are finally used to contribute to the debate between the behavioral economists and the proponents of rational choice theory. (shrink)

Continuing his exploration of the organization of complexity and the science of design, this new edition of Herbert Simon's classic work on artificial ...

It used to be that everyone read the "notorious" Bernard Mandeville (1670-1733). He was a great satirist and come to have a profound impact on economics, ethics and social philosophy. "The Fable of the Bees" begins with a poem and continues with a number of essays and dialogues. It is all tied together by the startling and original idea that "private vices" (self-interest) lead to "publick benefits" (the development and operation of society).

What can reason do for us and what can't it do? This is the question examined by Herbert A. Simon, who received the 1978 Nobel Prize in Economic Sciences "for his pioneering work on decision-making processes in economic organizations." The ability to apply reason to the choice of actions is supposed to be one of the defining characteristics of our species. In the first two chapters, the author explores the nature and limits of human reason, comparing and evaluating the major (...) theoretical frameworks that have been erected to explain reasoning processes. He also discusses the interaction of thinking and emotion in the choice of our actions. In the third and final chapter, the author applies the theory of bounded rationality to social institutions and human behavior, and points out the problems created by limited attention span human inability to deal with more than one difficult problem at a time. He concludes that we must recognize the limitations on our capabilities for rational choice and pursue goals that, in their tentativeness and flexibility, are compatible with those limits. (shrink)

This book is about forming effective critiques of neoclassical economics. Its focus is on constructive criticism of the foundations neoclassical theory, beginning with what Alfred Marshall called the `Principles of Economics'. It concludes that there is still much that can be done to make neoclassical economics more realistic.