Uncertainty Theory In Economic Theory

1940 Words 8 Pages
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 …show more content…
He suggests that we need to define an entry point for economic sociology, and he claims that the most promising is the problem of uncertainty. He understands uncertainty as the notion of radical or fundamental uncertainty, the situation in which it is not possible to calculate the probabilities of future results (Beckert 1996). This idea opens the question of how actors that are intentionally rational decision makers if they cannot calculate optimal decisions. If one investigates the economy under conditions of uncertainty, becomes inevitable turn to sociology. This provides a justification for why understanding the economy and intentionally rational actions requires a sociological …show more content…
Conclusion In this essay I started explaining the understanding of uncertainty by the economic theory, which did contemplated it at the beginning, then was considerate partially in a set of probabilities. However, agents do not rely solely in maximization calculations when they have to make decisions. Thus, some schools such institutionalism and neo-Keynesians have approaches that considerer the role of institutions, culture, or other social devices. The scholarship in uncertainty and economic sociology shows that uncertainty can be used as a theoretical explanation of embeddedness (Beckert and Zafirovski 2013) and can show why economic processes need institutions to work. The challenge is understand the social organization of economic markets under uncertainty (DiMaggio 2002). I think ultimately to understand the dynamics of a capitalist society is necessary to understand the operation of money and financial markets. Money is an incredibly complex subject, but at the same time is an issue on which economic sociology could contribute to our understanding of capitalist societies, while also contributes to the understanding current economic

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