Noah asks, "What if preferences are unstable?" Then they cannot be modeled owing to uncertainty. Experimental research is suggesting just this, and not only "la donna e mobile." There goes key assumptions like REH and EMH, calling into questions econometric and financial modeling as currently practiced. (Sound of heads exploding)
Noahpinion
What if preferences are unstable?
Noah Smith
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ReplyDeleteNoah Smith: "A good rule of thumb, though not always true, is this: Modern ("neoclassical") economic theory has been pretty successful at describing people's decision-making patterns in static settings ..."
ReplyDeleteWhat a joke!
Alexander de Tocqueville:
ReplyDeleteWhat if instabilites are preferred??
!!: :-D. ;-) :O
Given the number of problems that have already been observed with the micro assumptions made by mainstream macro, why will this time be different? They can just add another "friction" to the DSGE model, and churn out another dozen papers incorporating that friction.
ReplyDeleteThat's why I prefer to look at the angle that they have done the math wrong. Somewhat harder to ignore.