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Equilibrium: the non-excludability of good ideas

Looking back on Equilibrium 2012 I find that yes, it is a review of ESSA’s year and yes it is a memoir, a keepsake, a gift to our members. It is also, more than anything a celebration of economic thought. It is about the thinking and sharing of ideas, which has been what ESSA is about all along. In light of the imminent launch of Equilibrium 2013, I look back on our inaugural publication and pull out some examples of our writers’ ideas. The ingenuity of some of these propositions makes for a riveting read, as is the captivating nature of all good ideas.

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John Freebairn Lecture recap

On Thursday the 19th of September the University of Melbourne hosted the inaugural John Freebairn lecture titled ‘Governing the ungovernable: the market, technology and you’, presented by Professor Stephen King from Monash University. I had the opportunity to attend what was an insightful lecture about how the growing complexity, pace of change and use of technology has brought about a conundrum for market regulators. Stephen King’s speech was broken up into three parts: how regulation has adapted in the context of new technology, how some of the old rules will need remaking as technology has changed many business models, and finally regulating big data and the information revolution.  This article will provide a recap of the lecture for those who could not attend the event.

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The irrationality of the ‘rationality’ assumption

Historically, the term ‘rationality’ has been ascribed various meanings within the sphere of economics.  Typically, rationality has been expressed in terms of the idea that consumers attempt to maximise utility by arriving at an optimal decision in light of a complete set of information relating to the market in which they operate.

That is, the rational person of neoclassical economics opts for the decision that is subjectively best for that person in terms of a given utility function.[1] Consequently, neoclassical reasoning relies heavily on artificial factual assumptions such as perfect information, rather than accepting the reality of limited information and cognitive capacity in making any given decision.[2]

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