parsons action scheme Class 04 | Advanced Microeconomics | Duncan Foley

Advanced Microeconomics: Information and Behavior in Political Economy | Lecture 04 Social Interaction (Part A) | Duncan Foley | Leo Model Professor of Economics at the New School for Social Research ( http://www.newschool.edu/nssr) | Spring 2016

Class 04 Social Interaction (Part Α). The fourth class consists of a review of the entropy constrained behavior model, the completion of the expected utility theory and an introduction to the Social Interaction behavior.

The fourth lecture begins with a brief summary of the entropy-constrained behavior model and moves on to re-examining the expected utility function via Von Neumann and Morgenstern’s lottery example. Additionally, two more applications of the entropy-constrained theory are analyzed and visualized graphically. One is able to comprehend the weakness of the econometric models via this analysis. The econometric models ignore the constrains of real life and assume an asymmetry in error deviations, which cannot always lead to accurate results. The lecture ends with the explanation of the basic ground of the social interaction of the models and how this framework could be introduced in economics, something that until now has not been resolved by the mainstream utility theory.

parsons action scheme Class 04 | Advanced Microeconomics | Duncan Foley
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