Microeconomic Theory: A Mathematical Approach, James M. Henderson and Richard E. Quandt. New York: McGraw-Hill Book Co., Inc., Pp. xii Advanced Search. This content is only available as a PDF. Issue Section: Book Reviews. Microeconomic Theory: A Mathematical Approach, James M. Henderson and Richard E. Quandt. New York: McGraw-Hill Book Co., Inc., Pp. xii, This content is only available as a PDF. Download all figures. 56 Views. 0 Citations. Capet Marcel, "Henderson (James H.), Quandt (Richard E.) - Microeconomic theory: a mathematical approach," Revue Économique, Programme National.
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Mar 17, By Capet Marcel; Henderson (James H.), Quandt (Richard E.) - Microeconomic theory: a mathematical approach. _Quandt]_Microec(tirucamilo.tk).pdf - Ebook download as PDF File .pdf), Text File .txt) or Henderson and Quandt discuss microeconomics with the help of mathe The basic concepts of microeconomic theory are developed with the aid of. , James Mitchell Henderson, Richard E. Quandt McGraw-Hill, Microeconomic Theory: A. Mathematical Approach file download tirucamilo.tk STANFORD Microconomic thory
These arguments cast doubt on the view that RPT is a psychology-free theory, and this implies that the third explanation of the recognition lag in text- book material, is the most plausible one. The idea that RPT is not value-free has gained substantial ground in the last years and this can be seen from the textbook approach. The discussion so far suggests that choice theories are not psychology-free and thus supports the third explanation about the presence of hedonistic con- cepts in textbooks.
This argument can also be supported by a discussion of recent literature which indicates the preoccupation of modern microeconomics with utility maximization and other hedonism-related concepts. For instance, in an article which aims to explain why self-employment and income differ significantly by race, Bonjas and Bronars make a number of assumptions about the behaviour of agents.
One of the most important of these is that agents maximize their utility see Bonjas and Brbnars, , pp. The same assumption is employed in an examination of private income transfers.
In particular, it is assumed that parents maximize their utility when they transfer income to heirs.
This assumption is made in a paper which attempts to examine the motives for private income transfers see Cox, , pp. In the same spirit, Becker emphasizes the appropriateness of the S. Apart from the above, the standard theory of choice under uncertainty is based on the assumption that agents maximize expected utility. Moreover, this preoccupation with the idea of utility maximization has recently been stressed by theorists like K.
Arrow and H. As mentioned above, the drive towards neutralization meant that only one assumption was necessary for the construction of choice theories: rationality.
However, Arrow maintains that the apparently neutral assumption of rationality is almost always supplemented by assumptions of a different kind.
In order to support these arguments, Arrow gives an example which shows the importance of the assumption of utility maximization. He states that one can substitute utility maximization with habit formation. The consumer can still be rational and optimizing without aiming at utility maximization. This approach is different from utility maximization, as can be seen from the fact that if prices and income return to their initial level after several alterations, the final bundle purchased will not be the same as the initial one Arrow, , p.
Simon also stresses the preoccupation of many theorists with utility and utility maximization. He suggests that there is a bias towards the maximization of utility and proceeds to give an example of a decision situation where it is irrelevant but is still used because of the general attitude. He states that flood insurance is bought by persons who have experienced damaging floods or who are acquainted with persons who have had such experiences. The preoccupation with utility maximization has to be connected with the idea of utility as a positive subjective sensation satisfaction.
Although a number of theorists maintain that it is a purely semantic concept, the majority conceive it as a sensation see for instance Gravelle and Rees, , p.
As an additional indication of the presence of hedonistic concepts in modern microeconomics, one can mention examples from the modern theory of choice under uncertainty. In particular, in their effort to account for some inconsistencies in the standard theory of choice under uncertainty, some theorists have developed the regret theory. The basic point of this theory is that people tend to compare their actual situations with the ones they would have been in, had they made different choices in the past Loomes and Sugden, , p.
The subsequent analysis is conducted in terms of pleasurable or painful sensations. If they realize that a different choice would have led to a better outcome, people may experience the painful sensation of regret; if the alternative would have led to a worse outcome, they may experience a pleasurable sen- sation we call rejoicing. Loomes and Sugden, , p.
The specific reference to the psychological experience of pleasure, as well as the idea that agents are assumed to maximize expected modified utility, is another clear indication of the hedonistic connection.
More importantly, the conduct of analysis on an explicitly psychological basis is in sharp contrast with the earlier attempts towards neutralization.
In par- ticular, it was pointed out that in contrast to modern choice theories which claim to be psychology-free, textbook consumer theory is characterized by a high level of hedonistic influence. My view is that the third explanation is the most plausible. The fact that the textbook writers need to mention hedonistically based concepts in consumer theory implies that they are necessary for its comprehension.
This is an indication of the implicit existence of such concepts in the theory itself. This indication was reinforced by a discussion of some recent developments in the literature.
It was observed that psychological concepts are still being employed; this has also been identified by a number of theorists, specifically by Arrow and Simon, who have emphasized the preoccupation of modern choice theories with utility maximization. Furthermore, the explicit presence of con- S. Clearly, the implicit or sometimes explicit existence of hedonistic notions casts serious doubts on the alleged psychological neutrality of modern choice theories. This being so, it may be valuable to reopen the lines of com- munication between economists and psychologists to examine the empirical validity of the implicit hedonistic assumptions.
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