I've been saying this to economists for years. this talk should be the first thing every economics student hears. nice to see that economists are slowly realizing how flawed their thinking has been. Guess, we'll have to wait another 10y until people like our lecturer here also grasp the concept of computational irreducibility and understand what chaotic behavior of a dynamical system really implies.
The minimum number is 2. This is a completely general result--a "Proof by Contradiction" that the "Law of Demand" does not survive aggregation. I give an example from Alan Kirman in one my early Behavioural Finance lectures, and provide one of my own.
SMD theorem only states that the usual assumptions of rationality are insufficient to guarantee that the aggregate walrasian demand satisfies WARP, not that an aggregate walrasian demand could never satisfy WARP. The assumptions needed for aggregate demand to satisfy WARP are clearly laid out in chapter 4 of Mas-Colell.
Steve, anything you damn well like can be a demand curve, but what about likelihood? Are downward sloping demand curves still arguably more likely than (partially) upward sloping ones?
Very interesting but from my understanding the SMD theorem only shows that there might not be a unique solution in a general equilibrium framework, however modern macroeconomics is set up using the contraction mapping theorem to insure a unique solution. So I do not fully understand your criticism. I think drawing from micro foundation is extremely attractive and should not be discarded so quickly. I think more assumptions need to be loosened (and will be) but we’re heading in the right direction.
Very informative video. After taking a quick look at the titles of your other videos, I assume you are anti-Partial/General Equilibrium and therefore anti-marginalist (Jevons, Walras). I wonder if you have researched into Adam Smith, because he wrote in The Wealth of Nations that equilibrium was a fallacy originally crafted by merchants to justfiy their high profits.
I think in terms of macro-economics it's possible to use mathematical modelling for financial flows understanding the banking system as Prof. Keen has... however, at the micro level, it's completely ridiculous.
So the demand curve can be any polynomial. That is the demand curve of what, one specific product? Is that because of all the complex substituion effects between the multitude of all other products? If that is what this is about then this criticism isn't fair and doesn't have any significance other than making the Walrasian general equilibrium computationally complex, which it is anyway.
Aggregate demand relies on individual behaviour is independent. However, if their 2 downward slopping demand curves are dependent, then you cant aggregate their independent demands together to form a single down slopping demand curve. Their demand could be dependent on the income from the others demand. And 2 there can be societal behaviour where the 1 individuals behaviour changes the behaviour in another. For example buying a new car because your neighbour bought a car. So we need to make an assumption about their income and their behaviour towards it.
so obvious - and with minsky or computer models of today we can begin to understand what is going on - and even come up with verifiable and predictable results - keep fighting for reality and science over dogma and assumption you are a fresh breeze in a stuffy room. -peace
I appreciate the challenge you are dealing with. Thanks for being so patient with the myopia that is the current economics world.
I've been saying this to economists for years. this talk should be the first thing every economics student hears. nice to see that economists are slowly realizing how flawed their thinking has been. Guess, we'll have to wait another 10y until people like our lecturer here also grasp the concept of computational irreducibility and understand what chaotic behavior of a dynamical system really implies.
The minimum number is 2. This is a completely general result--a "Proof by Contradiction" that the "Law of Demand" does not survive aggregation. I give an example from Alan Kirman in one my early Behavioural Finance lectures, and provide one of my own.
SMD theorem only states that the usual assumptions of rationality are insufficient to guarantee that the aggregate walrasian demand satisfies WARP, not that an aggregate walrasian demand could never satisfy WARP. The assumptions needed for aggregate demand to satisfy WARP are clearly laid out in chapter 4 of Mas-Colell.
Steve, anything you damn well like can be a demand curve, but what about likelihood? Are downward sloping demand curves still arguably more likely than (partially) upward sloping ones?
Very interesting but from my understanding the SMD theorem only shows that there might not be a unique solution in a general equilibrium framework, however modern macroeconomics is set up using the contraction mapping theorem to insure a unique solution. So I do not fully understand your criticism. I think drawing from micro foundation is extremely attractive and should not be discarded so quickly. I think more assumptions need to be loosened (and will be) but we’re heading in the right direction.
What is the minimum number of people in a group and a specific example where the Law of demand does not hold?
Very informative video. After taking a quick look at the titles of your other videos, I assume you are anti-Partial/General Equilibrium and therefore anti-marginalist (Jevons, Walras). I wonder if you have researched into Adam Smith, because he wrote in The Wealth of Nations that equilibrium was a fallacy originally crafted by merchants to justfiy their high profits.
I think in terms of macro-economics it's possible to use mathematical modelling for financial flows understanding the banking system as Prof. Keen has... however, at the micro level, it's completely ridiculous.
0:12
So the demand curve can be any polynomial. That is the demand curve of what, one specific product? Is that because of all the complex substituion effects between the multitude of all other products?
If that is what this is about then this criticism isn't fair and doesn't have any significance other than making the Walrasian general equilibrium computationally complex, which it is anyway.
Aggregate demand relies on individual behaviour is independent. However, if their 2 downward slopping demand curves are dependent, then you cant aggregate their independent demands together to form a single down slopping demand curve.
Their demand could be dependent on the income from the others demand. And 2 there can be societal behaviour where the 1 individuals behaviour changes the behaviour in another. For example buying a new car because your neighbour bought a car.
So we need to make an assumption about their income and their behaviour towards it.
so obvious - and with minsky or computer models of today we can begin to understand what is going on - and even come up with verifiable and predictable results - keep fighting for reality and science over dogma and assumption you are a fresh breeze in a stuffy room. -peace