DECISION PREMISES AND ECONOMIC ORGANISATION (1998)
BibTeX
@MISC{Loasby98decisionpremises,
author = {Brian J Loasby and Stirling Fk La},
title = {DECISION PREMISES AND ECONOMIC ORGANISATION},
year = {1998}
}
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Abstract
proposed by Herbert Simon (1957, p. xii), with the transaction as rival units of analysis for developing the economics of organisation, and celebrates the victory of transaction cost economics as a theory of organisational forms. No usable analytical structure, by contrast, has been built on decision premises. In this paper I intend to examine the significance of decision premises, and to indicate how they may help us to understand economic behaviour. I shall also suggest why economists have ignored Simon’s proposal. The Premises of Theory It is appropriate to begin by recognising that Williamson’s own argument for basing analysis on unitary transactions relies on the implicit proposition that the choice of decision premises for economic theories may be decisive for the development of knowledge, though as is usual among economists that proposition is never formally stated. It is certainly true that the premise that economists should focus on transactions, and the costs of transactions, in order to explain the allocation of economic activities between firms and markets has had important consequences for the development of economic theory and for economists ’ perception of its applicability. This is just one example of the ways in which the development of economics has been shaped by the decision
Keyphrases
decision premise decision premise economic organisation economic theory unitary transaction relies herbert simon organisational form transaction cost economics rival unit simon proposal economic behaviour economist perception implicit proposition usable analytical structure important consequence economic activity
