Radical Ignorance in Individual Decision Making: Assessing Austrian Subjectivism

University of Siena Dept. of Economics Working Paper No. 289

26 Pages Posted: 27 Nov 2000

See all articles by Marcello Basili

Marcello Basili

University of Siena - Dipartimento di Economia Politica; University of Siena - Department of Economic Policy, Finance and Development

Carlo Zappia

University of Siena - Department of Economics and Statistics

Date Written: May 2000

Abstract

In recent years most Austrian developments have argued for a definitive shift away from the search for equilibrium constructs and in favor of the analysis of those institutions which favor ordered outcomes of the market process. These developments imply an inevitable withdrawal from methodological individualism and are based on the contention that a probabilistic approach to subjective decision making is flawed. Our aim in this paper is to point out that a withdrawal from equilibrium theorizing is not justified by the inability of pure economic theory to deal with radical ignorance. We argue that the kind of formal representation of decision making under uncertainty one finds in recent developments in microeconomic theory, namely the non-additive approach to subjectively probable assessments, recognizes as a starting point for research the view that ignorance is an inherent feature of every decision regarding future events. In this, it resembles the Shackleian assertion that the future is the unpredictable consequence of creative choices made by individual agents. A critical, but positive, attitude towards recent attempts to formalize radical ignorance suggests that the Austrian tradition may actually influence future research rather than merely constitute an optional supplement to it.

JEL Classification: B21, D81

Suggested Citation

Basili, Marcello and Zappia, Carlo, Radical Ignorance in Individual Decision Making: Assessing Austrian Subjectivism (May 2000). University of Siena Dept. of Economics Working Paper No. 289, Available at SSRN: https://ssrn.com/abstract=238779 or http://dx.doi.org/10.2139/ssrn.238779

Marcello Basili (Contact Author)

University of Siena - Dipartimento di Economia Politica ( email )

Piazza San Francesco 7
Siena, 53100
Italy

University of Siena - Department of Economic Policy, Finance and Development ( email )

Piazza San Francesco, 7
Siena, 53100
Italy

Carlo Zappia

University of Siena - Department of Economics and Statistics ( email )

Piazza San Francesco 7
Siena, Siena 53100
Italy

HOME PAGE: http://docenti-deps.unisi.it/carlozappia/

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