Hayek on Prices and Knowledge: Supplementing “The Use of Knowledge in Society” with The Sensory Order

Samuli Leppälä

A chapter in The Social Science of Hayek's ‘The Sensory Order’, 2010, pp 237-259 from Emerald Group Publishing Limited

Abstract: Purpose – To show that The Sensory Order is useful for understanding Hayek's position on the informational role of prices. Methodology/approach – Hayek's psychological theory argues that every sensation is interpreted in the light of past experience. This idea is applied to Hayek's view on the price system by arguing that, similarly, every price is interpreted in the light of local knowledge. The usefulness of this approach is tested by addressing some common mainstream interpretations. Findings – Prices perform their informational role in interaction with local knowledge. The standard view, in which prices convey the same information to everyone, ignores the fundamental importance of local knowledge and varying interpretations. Research limitations/implications – The paper only discusses some of the central insights given in Hayek's theory of the mind. Furthermore, implications for connected issues, such as entrepreneurship and market process theories in general, are left for subsequent research. Originality/value of paper – While the connections between Hayek's thought in different fields and the importance of interpretation has been suggested by others, this paper contributes to the Austrian price theory and suggests the relevance of The Sensory Order to economists by making this connection more pronounced.

Date: 2010
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... 2134(2010)0000013012
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
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:eme:aaeczz:s1529-2134(2010)0000013012

DOI: 10.1108/S1529-2134(2010)0000013012

Access Statistics for this chapter

More chapters in Advances in Austrian Economics from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().