Imagination, boldness, and modeling human choice

Israel Kirzner on entrepreneurial discovery:

For neoclassical theory the only way human choice can be rendered analytically tractable, is for it to be modeled as if it were not made in open-ended fashion, as if there was no scope for qualities such as imagination and boldness. Even though standard neoclassical theory certainly deals extensively with decision-making under (Knightian) risk, this is entirely consistent with absence of scope for the qualities of imagination and boldness, because such decision-making is seen as being made in the context of known probability function. In the neoclassical world, decision-makers know what they are ignorant about. One is never surprised. For Austrians, however, to abstract from these qualities of imagination, boldness, and surprise is to denature human choice entirely.

Posted by Nick Freiling

Founder/Director of PeopleFish. I write on technology, market research and economics. Bylines at Startup Grind, FEE, the American Enterprise Institute and the Mises Institute.

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