Probability Foundations of Economic Theory

Probability Foundations of Economic Theory

Probability Foundations of Economic Theory

Probability Foundations of Economic Theory

Synopsis

Concepts of probability are an integral component of economic theory. However there are a wide range of theories of probability and these are manifested in different approaches to economic theory itself. In this book Charles R. McCann Jr provides a clear and informative survey of the area which serves to standardize terminology and so integrate probability into a discussion of the foundations of economic theory. Having summarized the three main competing interpretations of probability, he outlines why it is of such a fundamental importance in economics, illustrating this with a comparison of Knight's and Keynes' very different conceptions. He then examines three very different schools of thought: the Austrians, Keynesians and the New Classical/Rational Expectations approach. McMann shows that the Austrian theories and those of Keynes are consistent with subjectivism, individualism and with a view of decision making as a process, entailing a form ofnecessarianismas a method of analysis. Rational Expectations, in contrast, are based on quantitative measurement and a need to reconstruct economic theory on instrumentalist grounds, requiring a frequentist approach to probability. Probability Foundations of Economic Theorywill interest those working in the history of economic thought, economic methodology and the philosophy of economics.
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