Neoclassical economics assumes rational behavior from actors (consumers and suppliers) as well as profit maximizing behavior. These assumptions make sense (do we want to assume people are irrational - how do you study that) but are they real. Are people rational, what about herd behavior, do they have the information to be rational and when they are rational do they maximize their profit or utility?
Neoclassical economics has become so mathematical, what do you think of using so many mathematical models in economics almost like physics does?
There is no doubt that there were several flaws in the neoclassical economic theories; however, this school of thought provided significant contributions to help the subsequent economists to understand the behaviors of society. Moreover, previous economic theorists were unable to understand that societal behaviors can also act as decisive factors for the economic theories. The theory of rational choice was one of the major flaw of this school, as people also make irrational behaviors most of times. Moreover, people will never be able to explain the decisions made by the human beings through the eyes of mathematics. Evidently, theorists of neoclassical economists did not know that there are a number of factors that can affect the decision-making behaviors of consumers.
Neoclassical economics assumes rational behavior from actors (consumers and suppliers) as well as profit maximizing behavior. These assumptions make sense (do we want to assume people are irrational - how do you study that) but are they real. Are people rational, what about herd behavior, do they have the information to be rational and when they are rational do they maximize their profit or utility?
Neoclassical economics has become so mathematical, what do you think of using so many mathematical models in economics almost like physics does?
There is no doubt that there were several flaws in the neoclassical economic theories; however, this school of thought provided significant contributions to help the subsequent economists to understand the behaviors of society. Moreover, previous economic theorists were unable to understand that societal behaviors can also act as decisive factors for the economic theories. The theory of rational choice was one of the major flaw of this school, as people also make irrational behaviors most of times. Moreover, people will never be able to explain the decisions made by the human beings through the eyes of mathematics. Evidently, theorists of neoclassical economists did not know that there are a number of factors that can affect the decision-making behaviors of consumers.