Economics: a methodolgical individualism in search of its own incompleteness

Olivier Favereau

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Abstract: The traditional methodological individualism (MI) of mainstream economics has frozen its opposition to methodological holism within a process of axiomatization completed in the early 1970s at two levels: 1) individual rationality (reduced to optimization); 2) inter-individual coordination (restricted to market equilibria). This "closed" MI thus defined its own validity limits: 1) a complete list of future states of nature; 2) a complete system of options markets. The violation of these conditions in the real world makes visible a double phenomenon of incompleteness. Mainstream economics has since developed three strategies of blindness, partial or total, at the cost of multiple inconsistencies. The positive treatment of this double incompleteness sketched in some heterodox schools would give rise to a new, "open", MI.

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Date: 2023
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Published in Palgrave Handbook of Methodological Individualism - volume II, Palgrave Macmillan, pp.497 - 524, 2023

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04371049

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