Keynes’s methodology and the analysis of economic agent behavior in a complex world

Richard Arena and Eric Nasica

Revue d'économie politique, 2021, vol. 131, issue 3, 371-402

Abstract: This article aims to analyze the impact of taking into account a truly uncertain and complex economic environment on the methodology used by Keynes. Our work leads to two main results. The first conclusion is that, even when an ordinal or cardinal measure of probability is impossible, Keynes provides a coherent set of tools for the analysis of economic decisions. In particular, even if a numerical probability cannot be determined, the choices of economic agents will be rationally governed by reasoning based on their limited but real knowledge of the observed reality and on non-numerical probabilities. The second result obtained is that the complex decision-making environment surrounding economic decisions influences the characterization of the individual actor himself and economic and social interactions; this form of economic analysis implies referring to a methodological conception which is open to and even requires the use of philosophy and other social sciences as cognitive psychology, social psychology and even anthropology. JEL codes: B21, B22, B31, B41, D81, D84, D91, E12, E71

Keywords: Keynes’s methodology; Uncertainty; Complexity; Rationality; Logical probability; Treatise on Probability; Economic agent behavior; Philosophy; Psychology; Méthodologie de Keynes; Incertitude; Complexité; Rationalité; Probabilité logique; Traité des Probabilités; Comportement de l’agent économique; Philosophie; Psychologie (search for similar items in EconPapers)
JEL-codes: B21 B22 B31 B41 D81 D84 D91 E12 E71 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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