Essentials of Constructive Heterodoxy: Behavior

17 Pages Posted: 1 May 2015  

Egmont Kakarot-Handtke

University of Stuttgart - Institute of Economics and Law

Date Written: April 29, 2015

Abstract

For a host of compelling methodological reasons, homo oeconomicus has to be replaced. This is consensus, the open question is how this could be accomplished. What is required first is the separation of the formal foundations into a structural and a behavioral part. This paper introduces the propensity function as general formalization of Economic Man/Woman. The propensity function is a compact formal expression of random, semi-random, and deterministic behavioral assumptions. It is shown how, in a random environment, target-oriented behavior produces stochastic stability and optimality in the product market. With homo oeconomicus the conception of simultaneous equilibrium, too, vanishes.

Keywords: new framework of concepts, structure-centric, axiom set, determinism, indeterminism, propensity function, information function, action function, Law of Supply and Demand, price setting

JEL Classification: B59, D01, D80

Suggested Citation

Kakarot-Handtke, Egmont, Essentials of Constructive Heterodoxy: Behavior (April 29, 2015). Available at SSRN: https://ssrn.com/abstract=2600523 or http://dx.doi.org/10.2139/ssrn.2600523

Egmont Kakarot-Handtke (Contact Author)

University of Stuttgart - Institute of Economics and Law ( email )

Keplerstrasse 17
Stuttgart
Germany

Paper statistics

Downloads
35
Abstract Views
202