Ludwig von Mises
Economics - to the great dismay of economists - is merely a branch of
psychology. It deals with individual behaviour and with mass behaviour.
Many of its practitioners sought to disguise its nature as a social
science by applying complex mathematics where common sense and direct
experimentation would have yielded far better results.
The outcome has been an embarrassing divorce between economic theory
and its subjects.
The economic actor is assumed to be constantly engaged in the rational
pursuit of self interest. This is not a realistic model - merely a
useful approximation. According to this latter day - rational - version
of the dismal science, people refrain from repeating their mistakes
systematically. They seek to optimize their preferences. Altruism can
be such a preference, as well.
Still, many people are non-rational or only nearly rational in certain
situations. And the definition of "self-interest" as the pursuit of the
fulfillment of preferences is a tautology.
The theory fails to predict important phenomena such as "strong
reciprocity" - the propensity to "irrationally" sacrifice resources to
reward forthcoming collaborators and punish free-riders.
Pages:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25