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Greatest Happiness Principle in a Complex System: Maximisation versus Driving Force

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  • Katalin Martinás

    ()
    (Department of Atomic Physics, Eötvös Loránd University)

  • Zsolt Gilányi

    (University of West Hungary)

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    Abstract

    From philosophical point of view, micro-founded economic theories depart from the principle of the pursuit of the greatest happiness. From mathematical point of view, micro-founded economic theories depart from the utility maximisation program. Though economists are aware of the serious limitations of the equilibrium analysis, they remain in that framework. We show that the maximisation principle, which implies the equilibrium hypothesis, is responsible for this impasse. We formalise the pursuit of the greatest happiness principle by the help of the driving force postulate: the volumes of activities depend on the expected wealth increase. In that case we can get rid of the equilibrium hypothesis and have new insights into economic theory. For example, in what extent standard economic results depend on the equilibrium hypothesis?

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    File URL: http://indecs.eu/2012/indecs2012-pp103-113.pdf
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    Bibliographic Info

    Article provided by Croatian Interdisciplinary Society Provider Homepage: http://indecs.eu in its journal Interdisciplinary Description of Complex Systems.

    Volume (Year): 10 (2012)
    Issue (Month): 2 ()
    Pages: 103-113

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    Handle: RePEc:zna:indecs:v:10:y:2012:i:2:p:103-113

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    Related research

    Keywords: driving force; equilibrium hypothesis; utility maximisation;

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    1. Hellwig, Martin F., 1993. "The challenge of monetary theory," European Economic Review, Elsevier, Elsevier, vol. 37(2-3), pages 215-242, April.
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