Economics @ ITT

Posted in Uncategorized by ittecon on January 18, 2013

Interesting food for thought

Unlearning Economics

Is it really feasible that there can be a single theory of ‘the market’ that encapsulates everything from tomatoes to CEOs to houses? Engineers do not think they can apply the same theory to every fluid, and similarly, it is not unreasonable to suggest markets might function very differently depending on what is being bought and sold. In this post, I’ll set out a couple of alternative interpretations of supply and demand for different markets. I developed these alternative approaches based on some well known real world observations.

A few caveats:

(1) I am not interested in deriving these schedules ‘rigorously’ from arbitrary axioms about individual behaviour. Such an approach is unnecessary as phenomena may be emergent, and it always seems to run into problems.

(2) These models should really only be interpreted as working for individual markets on a small scale, as large scale feedback effects render this type…

View original post 1,683 more words

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