Hacker News new | ask | show | jobs
by selectionbias 2381 days ago
Among the first things you learn in microeconomic theory are the expected utility axioms (developed by Von Neumann and Morganstern), and Afriat's theorem. These results give conditions under which an agent's behavior is indistiguishable from utility/expected utility maximization. This is the standard justification for the use of utility maxmization in economics: that it is a good mathematical model of decision making, not that it captures what actually goes on in people's heads. This is not a heterodox idea, it has been mainstream since at least as early as the 1950s. Of course, modern economists like to empirically verify whether these models of decision-making are accurate or whether other behavioral models are more consistent with the data, because economics is a science. Praxeology, on the other hand, is the opposite of science.