A Micro-Equation for Economic Action: Action Generation under Path-Absence

Kim Cook

MPRA Paper from University Library of Munich, Germany

Abstract: Existing theories often implicitly presuppose that choice becomes action. This paper explicitly formalizes that missing link: how an economic action is generated when no path is given ex ante. From three axioms and the structural properties of the probability function, we derive the direction coefficient k and obtain the action equation dx = k · s · w · dφ, where dφ is the local expected surplus, s is loss–gain sensitivity, w is probability weighting, and k is determined by the optimal input intensity. This equation specifies both direction and intensity from local information alone, without presupposing an ex ante path or transition rule. We further show that classical optimality conditions — the equimarginal principle, P = MC, and NPV = 0 — can be interpreted as boundary conditions where the action incentive is exhausted (dφ = 0). This paper provides a minimal structure for action generation that serves as a common micro-framework for diverse economic actions.

Keywords: Action generation; Path-absence; Local signal; Boundary condition; Pre-metric structure (search for similar items in EconPapers)
JEL-codes: B41 D01 D03 D83 (search for similar items in EconPapers)
Date: 2026-05-10
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