Role Of Uncertainty Play Economic Theory Models And Contrast This Perspective With The Sociological Account

1940 Words Dec 9th, 2014 null Page
II. Brief description of the role that uncertainty plays in economic theory/models and contrast this perspective with the sociological account Since Knight (2005), the monetarist models use assumptions of perfect information and imperfect with respect to the future. With the emergence of imperfect information the economist stated that it can be predicted by stochastic variables (random) from the probabilistic point of view, one can calculate the costs and benefits of different actions present. These assumptions were replaced by Keynes with the notion of uncertainty about the future, which is the cause (according to him) of existence of underemployment of productive resources and persistent imbalances in the economic system. Components of uncertainty about the future are the investment risk factor leading to speculative behavior of savers, the incompatibility of present and future decisions, and the future scenarios without limit. (Meller 1986) Institutional economist such as Williamson (1981) claims that uncertainty is a critical dimension for describing transactions. At different states of nature uncertainty may occur due the lack of information that has an agent on decision that other may take, or the opportunistic behavior that the information that is available. Akerlof (1970) sat much uncertainty in economics with the conceptual principles of the theory of asymmetric information. This pioneering work made him the "father" of the so-called information economy. He…

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