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« Gary Becker (1930-2014) -- An Economist for the Ages | Main | Happy Birthday Professor Hayek »

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Frederic raises a very interesting question about the difference between markets and, say, the household or other non-market examples of rational choice. Where is the equivalent of the market process moving outcomes toward equilibrium in the latter cases?

In 1962, Becker said that you did not need agent "rationality" to get a negatively sloped demand curve -- scarcity is enough. Later he argued that "equilibrium" is an *assumption* of the economic approach. Add these two things together and Becker seems to have created a rational choice theory with peculiar characteristics. There is no mental process producing rationality (maybe it is in the constraints, but where?). There is no market process producing equilibrium.

The more you think about this the stranger it is. Hmm.

Yes, we need Becker and Kirzner.

We should exhaust all possible changes in constraints. But man creates new constraints and new realities, a point that Buchanan and Kirzner each made in his own way.

Adam Smith postulated that feudalism ended and the modern consumer economy was born because of a change in tastes. In our modern consumer society, how can we postulate a constancy of tastes?

When there is people involved there is never a solution accepted by everyone. But the general approach should stand. Some studies show that eve today many people don't look at the price or compare them. They act like they have endless amount of money. But in general it is the assumption that open markets are based on.

I agree with Israel Kirzner theoretical justification, rational choice is a part of human’s behavior historically and today but it does not provide us with the whole truth. The rational sense can abandon humans and the interactions in markets can be partly decided by other aspects (family history, living situation and so on). It seems that many economist has the focus set on how the prices and income changes and that alone determines the human behavior in the markets.

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