The Invisible Hand in Economics: How Economists Explain Unintended Social Consequences

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Taylor & Francis, Nov 23, 2009 - Business & Economics - 254 pages
This is a book about one of the most controversial concepts in economics the invisible hand. The author explores the unintended social consequences implied by the invisible hand and discusses the mechanisms that bring about these consequences.

The book questions, examines and explicates the strengths and weaknesses of invisible hand explanations concerning the emergence of institutions and macro-social structures, from a methodological and philosophical perspective. Aydinonat analyses paradigmatic examples of invisible-hand explanations, such as Carl Menger's `Origin of Money' and Thomas Schelling's famous chequerboard model of residential segregation in relation to contemporary models of emergence of money and segregation.Based on this analysis, he provides a fresh look at the philosophical literature on models and explanation and develops a philosophical framework for interpreting invisible hand type of explanations in economics and elsewhere. Finally, the author applies this framework to recent game theoretic models of institutions and outlines the way in which they should be evaluated.

Covering areas such as history, philosophy of economics and game theory this book will appeal to philosophers of social science and historians of economic thought, as well as to practising economists.
 

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Contents

1 Introduction
1
2 Unintended consequences
11
3 The origin of money
27
4 Segregation
50
5 The invisible hand
68
6 The origin of money reconsidered
93
7 Models and representation
119
8 Game theory and conventions
146
Smith Jevons and Mises on money
169
Models of emergence of money
173
Explorations of the chequerboard world
178
Focal points and risk dominance
182
Notes
194
Bibliography
216
Index
243
Copyright

9 Concluding remarks
165

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About the author (2009)

N. Emrah Aydinonat is Lecturer in philosophy of economics and economic growth at Ankara University, Turkey.

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