Where are the big bills? Escaping the endogenizer’s dilemma

Adam Martin ()

The Review of Austrian Economics, 2014, vol. 27, issue 1, 95 pages

Abstract: The continual expansion of rational choice theory to a greater range of social phenomena—from markets to politics and institutions—is a testament to its success. Each further application, however, simultaneously forecloses a potential source of inefficiency in economic systems. Abdicating efficiency considerations impairs economics’ explanatory power as much as its normative relevance. In this paper I explore the interconnected roles of subjectivism and knowledge problems in accounting for inefficiency. I conclude that the knowledge-generating properties of institutions allow for efficiency comparisons, but only in the embrace of a thoroughgoing subjectivism. Copyright Springer Science+Business Media New York 2014

Keywords: Coase theorem; Economic efficiency; Knowledge problem; Rational choice; Subjectivism; A11; B21; B53; O12; P51 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1007/s11138-013-0231-y

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