Equilibrium Models in Economics

Purposes and Critical Limitations

Lawrence A. Boland

Insightful examination of a core concept in economics
Provides profound insight into crucial debates about equilibrium and their implications
Looks ahead by discussing recent developments in economics, including behavioral, experimental, and complexity approaches.

Equilibrium Models in Economics

Purposes and Critical Limitations

Lawrence A. Boland

Description

The concept of equilibrium is fundamental to economic theory, according to which, it exists when supply and demand are balanced. Equilibrium Models in Economics critically examines the major problematic assumptions employed to build equilibrium models. It gives particular attention to the assumptions used to characterize learning, knowledge and expectations.

Lawrence Boland here explores whether equilibrium models can provide a realistic explanation of economic events and objects such as prices, market demands and market supplies. He traces how the different perspectives on equilibrium models represented by such creators as Kenneth Arrow, Robert Clower, and George Richardson influenced subsequent developments in economics. A key debate is about the comparative importance of whether equilibrium refers to a state of an actual economy or a property of a formal mathematical model. Another is the extent that the distinction between a model's exogenous vs. endogenous variables involves causality. Also explored are more recent efforts provided by behavioral, evolutionary, and complexity economics-whether they might change how economics is practiced in the future and how they could.

Equilibrium Models in Economics is a trenchant exploration of how the discipline has grappled with attempts to understand and explain the way information, knowledge, and the expectations of actors participating in the economy influence outcomes and behavior. It presents a realistic, workable theory of knowledge and learning, simulating how decision makers and other actors operate in fast-changing equilibrium conditions.

Equilibrium Models in Economics

Purposes and Critical Limitations

Lawrence A. Boland

Contents

Preface
Part I: The purpose and problems for equilibrium models
Chapter 1. Equilibrium models and explanation
Chapter 2. Equilibrium attainment vs. equilibrium necessities
Chapter 3. Does general equilibrium attainment imply universal maximization?
Chapter 4. Time and knowledge matters: General equilibrium attainment.
Chapter 5. Equilibrium concepts and critiques: two cultures.
Part II: The limits of equilibrium models
Chapter 6. Recognizing knowledge in equilibrium models.
Chapter 7. Limits of equilibrium methodology: An educational dialogue.
Chapter 8. Equilibrium models vs. realistic understanding.
Chapter 9. Macroeconomic equilibrium model building and the stability problem
Chapter 10. Equilibrium models intended to overcome limits.
Chapter 11. Equilibrium models vs. evolutionary economic models
Chapter 12. Equilibrium models vs. complexity economics
Part III: Avenues for overcoming the limits equilibrium models:
Chapter 13. Building models of price dynamics
Chapter 14. Building models of non-clearing markets
Chapter 15. Building models of learning and the equilibrium process
Epilogue: Prospects for changing equilibrium model building practice in economics
Bibliography
Names Index
Subject Index

Equilibrium Models in Economics

Purposes and Critical Limitations

Lawrence A. Boland

Author Information

Lawrence A. Boland is Professor Emeritus at Simon Fraser University.

Equilibrium Models in Economics

Purposes and Critical Limitations

Lawrence A. Boland

Reviews and Awards

"Too often these days, students of economics are simply taught techniques, without being trained to question basic assumptions. Lawrence Boland's book helps to fill that vital gap. Written by a well-established philosopher of economics, it probes the basic equilibrium apparatus of mainstream theory. Both students of economics and established scholars will find lots of very interesting and useful questions here." -- Geoffrey Hodgson, Research Professor, Hertfordshire Business School, University of Hertfordshire, UK

"Lawrence Boland is one of the most lucid authors when it comes to methodology in economics. His new book is no exception. It offers profound insights on the explanatory potential and limitations of the theory of market equilibria. Every student of economics should early on be confronted with Boland's challenging discussion." -- Ulrich Witt, Professor of Economics, Max Planck Institute of Economics Jena, Germany