Thrainn Eggertsson and the Problem of Knowledge: The Effectiveness of Conveying Information in the Electoral and Financial Markets

35 Pages Posted: 7 Jun 2012

See all articles by John N. Drobak

John N. Drobak

Washington University in St. Louis - School of Law

Date Written: June 7, 2012

Abstract

Throughout his career, Thrainn Eggertsson has been concerned with improving economic theory as a way to help us to understand the economic world. This has led him to focus on the problem of knowledge, which Eggertsson believes hinders the improvement of theory. This essay attempts to contribute to a better understanding of the knowledge problem by examining some aspects of the way people process information. The essay posits that belief systems and non-rational decision-making limit the effectiveness of information transmission and make people reluctant to accept and process new information. To illustrate this concern, it examines use two types of information “markets.” First, the essay will consider whether information about political candidates is effective in changing the views of the voters. Then it will examine the conservatism of economists as an important factor in decisions about the appropriate degree of economic regulation. My hope is that the essay will make a small contribution toward helping with what Trainn has identified as the knowledge problem.

Keywords: Sociology of Economics, Economics of Knowledge, Economic Decision Making, Models of Decision Making

JEL Classification: A12, A13, A14, B31

Suggested Citation

Drobak, John N., Thrainn Eggertsson and the Problem of Knowledge: The Effectiveness of Conveying Information in the Electoral and Financial Markets (June 7, 2012). Washington University in St. Louis Legal Studies Research Paper No. 12-05-17, Available at SSRN: https://ssrn.com/abstract=2079749 or http://dx.doi.org/10.2139/ssrn.2079749

John N. Drobak (Contact Author)

Washington University in St. Louis - School of Law ( email )

Campus Box 1120
St. Louis, MO 63130
United States

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