IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/48372.html
   My bibliography  Save this paper

The irresistible charm of the Microfoundations, or the overwhelming force of the discipline's Hard Core?

Author

Listed:
  • Skouras, Thanos
  • Kitromilides, Yiannis

Abstract

The appeal of the microfoundations project in economics is strongly supported by the considerable force of the discipline's "hard core" (in Lakatos' sense). This is especially the case, if the microfoundations metaphor is seen as a way of giving precedence to microeconomics in unifying economic theory rather than as requiring that all macroeconomic propositions are reduced to or derived from microeconomic ones. Given the micro-theoretical nature of the "hard core", the microfoundations project and professional respect for the "hard core" have become closely intertwined and the orientating and disciplining role of the latter is of crucial importancε in driving the former. Thus, questioning the microfoundations project is tantamount to confronting the "hard core". Maximization of utility and maximization of profit, which are the two most fundamental tenets of the "hard core", both suffer from serious weaknesses. Maximization of utility is not only contradicted by a lot of experimental and other empirical evidence but it is also neither necessary nor sufficient for establishing the "law" of demand. Profit maximization is falsified both on theoretical and empirical grounds, in the case of large corporations under managerial control, and is inconsistent or implausible in the case of small owner-run firms. Consequently, privileging micro over macro theory does not ensure sound foundations and the microfoundations project makes little sense. It follows that the search for consistency between microeconomics and macroeconomics should best be pursued in terms of the bridge metaphor.

Suggested Citation

  • Skouras, Thanos & Kitromilides, Yiannis, 2013. "The irresistible charm of the Microfoundations, or the overwhelming force of the discipline's Hard Core?," MPRA Paper 48372, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:48372
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/48372/1/MPRA_paper_48372.pdf
    File Function: original version
    Download Restriction: no

    References listed on IDEAS

    as
    1. Nabil Al-Najjar & Sandeep Baliga & David Besanko, 2008. "Market forces meet behavioral biases: cost misallocation and irrational pricing," RAND Journal of Economics, RAND Corporation, vol. 39(1), pages 214-237.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    microfoundations; hard core; utility maximization; profit maximization; methodological individualism; fallacy of composition; unity of science; professionalization of economics;

    JEL classification:

    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:48372. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.