The Present State of Consumer Theory

The central message of the first edition is echoed here in the second edition: the evolution of economics as an empirical science hinges importantly on the employment of realistic generative and auxiliary assumptions. This edition also includes an additional chapter of the New Institutional Economics. While demand theorists have generally not embraced the notion of cognitive limits, the new institutional economists regard economic agents as "intendedly rational, but only limitedly so." Contents: Some thoughts on Models and Model Building; Ordinal Utility Theory; The New Approach; The Multi-Equation Utility Function; The Household Production Function; Procedural Rationality and the Technology of Choice; Bounded Rationality and the New Institutional Economics; and A Postscript on Empirical Demand Estimation.