The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. – F.A. Hayek
Posted in Extended Order on Feb 20th, 2012
Frank Knight was one of the first economists to clearly describe the difference between risk and uncertainty. Risk is something for which the probability distribution is reasonably well understood ex-ante. For example, if you secure your daily bread by a coin flip, we can understand the likelihood that you will obtain a meal upon any [...]
Posted in Market Failures on Jan 25th, 2011
Last week, we started to discuss how it was impossible to identify whether a low price was a “predatory” price. We continue in this post to work our way through Demsetz’s paper. Another way to potentially identify predatory behavior is not to look at prices, but rather to look at how firms’ output levels change [...]
Posted in Market Failures on Jan 17th, 2011
In a previous post, we examined whether it was even possible in principle to determine if a company was engaging in “socially harmful” predatory pricing. Today we’ll address whether there is even a theoretical possibility for making such a determination. And in another future post, we’ll return to the more fundamental question of whether price [...]
Posted in Price Controls, Price System on Oct 30th, 2009
Worst Economic Reasoning, Ever. These are the sorts of folks that think they know best how to run your economic lives. The two most egregious points are these: (1) We really are hoping people go on the honor system and let us immunize people in the priority groups,” Southern Nevada Health District spokeswoman Stephanie Bethel [...]
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