The topic of today’s post is chapter 3: The Notion of Utility. Some people think that the stance on utility can quickly separate Austrians from adherents of other schools. And no, this is not as simple as just asking whether utility is cardinal or ordinal.
Test yourself on these questions, too. Continue reading →
Adherents of the Austrian school of economic thought are often accused of inability to use mathematical methods. The Austrians themselves often mistrust math applied to economic theory, if it’s anything more complicated than arithmetic or basic algebra, either on the grounds that “utility is not cardinal” or simply because “Mises never used calculus”.
Therefore, it may seem that Theory of Games and Economic Behavior, by mathematicianJohn von Neumann and economist Oskar Morgenstern, is incompatible with Austrian views. Or is it?