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Entrepreneurial Judgment, Decision Procedure and the Inevitable Emergence of the Non‐optimizing Firm in a Capitalist Economy
Author(s) -
Furubotn Eirik G.
Publication year - 2014
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/meca.12062
Subject(s) - generalization , economics , pareto principle , pareto optimal , entrepreneurship , microeconomics , process (computing) , neoclassical economics , pareto efficiency , economic system , mathematical economics , set (abstract data type) , computer science , operations management , mathematics , mathematical analysis , finance , programming language , operating system
It has been argued that understanding of entrepreneurship and firm behavior can be advanced by generalizing the static theory of the neoclassical firm so that it can deal with conditions in a dynamic economy. The paper rejects generalization and explains why such a shift causes the nature of the allocation process to change from the neoclassical pattern. Under generalization, critical information becomes prohibitively costly to obtain and entrepreneurial judgment rather than the Pareto rules decides allocation. Thus, the non‐optimizing firm becomes dominant.