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Pastimes : Austrian Economics, a lens on everyday reality -- Ignore unavailable to you. Want to Upgrade?

To: Don Lloyd who wrote (312)	11/18/2003 3:17:55 AM
From: gpowell	Read Replies (1) \| Respond to of 445

Even if utility has enough reality to be maximized, there is nothing to say that the maximum state can't be found and achieved by an exhaustive global search strategy performed over all achievable states. My post did not mention how decision makers discover exchange opportunities. It does define what states might be points of equilibrium. We can only say now that under utility maximization assumptions, equilibrium will occur at points of intersecting indifference sets, subject to constraints of course. The maximum state may or may not be close to the second ranked state, but it need not necessarily share any goods content with it. In a sense, every choice state shares the same bundle of goods, which, because of the presence of money, includes goods that have not come into existence. However, the quantity demanded of any particular good in any particular state may be zero.