The Bankruptcy of Economics

Joseph Wayne Smith, Graham Lyons and Gary Sauer-Thompson
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Joseph Wayne Smith: University of Adelaide
Graham Lyons: Glen Bold Cattle Ranch
Gary Sauer-Thompson: Flinders University of South Australia

Chapter 2 in The Bankruptcy of Economics: Ecology, Economics and the Sustainability of the Earth, 1999, pp 15-53 from Palgrave Macmillan

Abstract: Abstract Rational choice theory dominates orthodox microeconomics, and as we have already mentioned, it is having an increasing influence on the social sciences in general. The broad rational choice approach explains social phenomena by reference to specific individual psychological properties, in particular: (1) it assumes that agents are self-regarding in their desires and actions and (2) in acting to satisfy these self-regarding desires agents will act in accordance with the formal theory of rationality represented by modern decision theory — typically Bayesian decision theory (Pettit, 1993, 265). In this chapter we will attack the behavioral foundations of modern economics, primarily by an attack upon decision theory. Our aim in this chapter and the next is to show that the theory of “rational economic man” is untenable. We hope to show that orthodox economics is damaged at the most fundamental epistemological level.

Keywords: Decision Theory; Social Welfare Function; Indifference Curve; Cash Holding; Expected Utility Theory (search for similar items in EconPapers)
Date: 1999
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DOI: 10.1007/978-1-349-27569-4_2

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