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Essentials of Constructive Heterodoxy: Behavior

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  • Kakarot-Handtke, Egmont

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.

Suggested Citation

  • Kakarot-Handtke, Egmont, 2015. "Essentials of Constructive Heterodoxy: Behavior," MPRA Paper 64035, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:64035
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    References listed on IDEAS

    as
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    3. J. M. Keynes, 1937. "The General Theory of Employment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 51(2), pages 209-223.
    4. Kakarot-Handtke, Egmont, 2014. "The Law of Supply and Demand: Here It Is Finally," MPRA Paper 58004, University Library of Munich, Germany.
    5. Kakarot-Handtke, Egmont, 2015. "Essentials of Constructive Heterodoxy: Profit," MPRA Paper 62694, University Library of Munich, Germany.
    6. Christian Arnsperger & Yanis Varoufakis, 2006. "What Is Neoclassical Economics? The three axioms responsible for its theoretical oeuvre, practical irrelevance and, thus, discursive power," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 53(1), pages 5-18, March.
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    More about this item

    Keywords

    new framework of concepts; structure-centric; axiom set; determinism; indeterminism; propensity function; information function; action function; Law of Supply and Demand; price setting;
    All these keywords.

    JEL classification:

    • B59 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Other
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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