Open AccessIntension, extension, and the model of belief and knowledge in economics
Author(s) -
Ivan Moscati
Publication year - 2012
Publication title -
erasmus journal for philosophy and economics
Language(s) - English
Resource type - Journals
ISSN - 1876-9098
DOI - 10.23941/ejpe.v5i2.103
Subject(s) - intension , extension (predicate logic) , framing (construction) , mainstream , space (punctuation) , epistemology , object (grammar) , economic model , set (abstract data type) , computer science , mathematical economics , economics , artificial intelligence , microeconomics , political science , engineering , philosophy , structural engineering , law , programming language , operating system
This paper investigates a limitation of the model of belief and knowledge prevailing in mainstream economics, namely the state-space model. Because of its set-theoretic nature, this model has difficulties in capturing the difference between expressions that designate the same object but have different meanings, i.e., expressions with the same extension but different intensions. This limitation generates puzzling results concerning what individuals believe or know about the world as well as what individuals believe or know about what other individuals believe or know about the world. The paper connects these puzzling results to two issues that are relevant for economic theory beyond the state-space model, namely, framing effects and the distinction between the model-maker and agents that appear in the model. Finally, the paper discusses three possible solutions to the limitations of the state-space model, and concludes that the two alternatives that appear practicable also have significant drawbacks.