Costs of choice: reformulating price theory without heroic assumptions

Abigail Devereaux ()
Additional contact information
Abigail Devereaux: Wichita State University

Public Choice, 2025, vol. 202, issue 3, No 9, 455-481

Abstract: Abstract The space of human possibilities is vast and ever-growing in a creative, unpredictable fashion. Still, prices form. Acknowledging the costs of choice invokes the famous infinite regress argument wherein utility can’t be calculated without first computing an infinite chain of transaction costs. Rational individuals, to avoid getting stuck in infinite regress, must look outside themselves to make decisions. Heuristics, culture, aesthetics, and other elements of human sociality can be understood as grappling hooks to scale the unknown. Contextual or heuristic decision-making appears irrational under perfect knowledge assumptions, but theorists of creatively evolving systems cannot sufficiently explain emergent system features like prices, tradeoffs, and transaction costs without marshaling a nontrivial theory of knowledge acquisition and use. A price theory of creatively evolving social systems must, therefore, minimize a priori agent knowledge, like the “classical price theory” developed by Inoua and Smith (Economics of markets: neoclassical theory, experiments, and theory of classical price discovery, Palgrave Macmillan, London, 2023). I motivate and then discuss the contours and implications of a price theory that takes the costs of choice seriously, such that the primary modeling assumption isn’t epistemic heroism but epistemic humility.

Keywords: Price theory; Decision-making costs; Heuristics; Cultural influence; Rationality (search for similar items in EconPapers)
JEL-codes: D01 D83 D84 D85 D87 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11127-025-01265-6 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:pubcho:v:202:y:2025:i:3:d:10.1007_s11127-025-01265-6

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11127/PS2

DOI: 10.1007/s11127-025-01265-6

Access Statistics for this article

Public Choice is currently edited by WIlliam F. Shughart II

More articles in Public Choice from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().