Where are the Big Bills? Escaping the Endogenizer's Dilemma

26 Pages Posted: 25 Oct 2013

See all articles by Adam G. Martin

Adam G. Martin

Texas Tech University - Free Market Institute

Date Written: October 22, 2013

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.

Keywords: Coase theorem, Economic efficiency, Knowledge problem, Rational choice, Subjectivism, Public Choice, Austrian Economics

JEL Classification: A11, B21, B53, O12, P51

Suggested Citation

Martin, Adam G., Where are the Big Bills? Escaping the Endogenizer's Dilemma (October 22, 2013). Available at SSRN: https://ssrn.com/abstract=2343772 or http://dx.doi.org/10.2139/ssrn.2343772

Adam G. Martin (Contact Author)

Texas Tech University - Free Market Institute ( email )

Box 45059
Lubbock, TX 79409-5059
United States

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