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Where are the big bills? Escaping the endogenizer’s dilemma

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  • Adam Martin

Abstract

The continual expansion of rational choice theory to a greater range of social phenomena—from markets to politics and institutions—is a testament to its success. Each further application, however, simultaneously forecloses a potential source of inefficiency in economic systems. Abdicating efficiency considerations impairs economics’ explanatory power as much as its normative relevance. In this paper I explore the interconnected roles of subjectivism and knowledge problems in accounting for inefficiency. I conclude that the knowledge-generating properties of institutions allow for efficiency comparisons, but only in the embrace of a thoroughgoing subjectivism. Copyright Springer Science+Business Media New York 2014

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  • Adam Martin, 2014. "Where are the big bills? Escaping the endogenizer’s dilemma," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 27(1), pages 81-95, March.
    • Handle: RePEc:kap:revaec:v:27:y:2014:i:1:p:81-95
    DOI: 10.1007/s11138-013-0231-y
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    References listed on IDEAS

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    Cited by:

    1. Nick Cowen, 2018. "Robust Against Whom?," Advances in Austrian Economics, in: Austrian Economics: The Next Generation, volume 23, pages 91-111, Emerald Group Publishing Limited.

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    More about this item

    Keywords

    Coase theorem; Economic efficiency; Knowledge problem; Rational choice; Subjectivism; A11; B21; B53; O12; P51;
    All these keywords.

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics
    • B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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