Economics as a Social Science
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I have argued in the preceding chapters that although the normative theory of rational individual decision-making is a crucial conceptual and formal tool for economists, economics is not best viewed as an extension of that theory. I have furthermore aimed to set economics firmly apart from psychology by emphasizing that whereas psychologists are fundamentally concerned with the idiosyncratic information processing dynamics of individuals, typically abstracted from their social environments, economists explore what happens when people and other goal-directed agents faced with scarcity of resources are coordinated by social and institutional structures to focus on prospects for specialization, exchange and competition. Summarizing, I have argued that, despite important connections, psychology is not in its core a social science, whereas economics is.
KeywordsUtility Function Nash Equilibrium Business Cycle Credit Default Swap Coordination Game
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