On Tue, 13 Aug 2002, john hull quotes Mario Bunge:
> "In short, THE USE OF UTILITY FUNCTIONS IS OFTEN
> MATHEMATICALLY SLOPPY AND EMPIRICALLY UNWARRANTED.
It is an interesting regularity that some non-economists -- particularly
philosophers and physicists, and Bunge is both -- seem to think even the
most cursory glance at economic theory is sufficient background to
generate criticism such as this unfortunate piece.
Amongst many other misunderstandings of basic theory, Bunge's point above,
which he repeats several times, confuses the empirical content of the
assumptions that underpin a theory with the empirical content of the
theory itself. Systematic violation of (expected) utility theory in
experiments does not mean that theories based on those assumptions are
"empirically unwarranted" any more than the insight that there are not
just two people in two countries using two factors of production to
produce two products invalidates any predictions of trade models based on
those assumptions.
The paragraph about utility functions needing "explicit or implicit"
functional forms is just bizarre.
Cheers,
Chris Auld
Department of Economics
University of Calgary
[EMAIL PROTECTED]
