Template-Type: ReDIF-Paper 1.0
Title: The Dynamic Temporal Sequence and Reflexive Adjustment Behavior: Foundations for a Behavioral Alternative to Optimization Theory
Author-Name: Davis, John B.
Author-X-Name-First: John	
Author-X-Name-Last: Davis
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Author-Workplace-Name: Department of Economics Marquette University
Author-Email: john.davis@Marquette.edu
Author-Workplace-Name: Department of Economics Marquette University
Abstract: This paper discusses the difference between mainstream and heterodox economics in terms of philosophy’s distinction between two types of temporal sequences governing events: the static, truth-tenseless before-after sequence and the dynamic, truth-tensed past-present-future sequence. Mainstream theory and optimization analysis employs the first. However, Aristotle showed long ago this implies fatalism. Heterodox explanations employ the second, which I argue implies people reflexively adjust their choices over time in a combined backward-looking and forward-looking way that rules out optimization. Central to this explanation of behavior is how uncertainty about the future is connected to uncertainty about the past. I show this can be explained in terms of how people engage in counterfactual thinking whereby their uncertainty about the future is investigated through how they re-examine their uncertainty about the past. This behavioral explanation affects how we interpret two different sets of temporal phenomena heterodoxy emphasizes: (i) irreversibility and path-dependence and (ii) emergence and cumulative causation. I argue this demonstrates the need for the open economic thinking heterodoxy employs, not the closed economic thinking the mainstream employs.
Creation-Date: 2024-05
File-URL: https://epublications.marquette.edu/econ_workingpapers/97
File-Format: application/pdf 
Number: 2024-03
Classification-JEL: B41, B50, D01, D80
Keywords: temporal sequences, fatalism, reflexive adjustment, future-past uncertainty, open economic thinking
Handle: RePEc:mrq:wpaper:2024-03