Utility Theory

    At the Institute, we're expanding the way economists think about human welfare.
    By exploring the philosophical and psychological foundations of Utility Theory, we can better understand human happiness and behavior.

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    Crisis and the Sacred

    It would be nonsensical to blame economists for not foreseeing the crisis; even less for causing it. It was obvious there would be a crisis. It was impossible to foresee how it would start and evolve, and at what moment these events would occur. Read more

    A New Rational Expectations Hypothesis: What Can Economists Really Know About the Future?

    John Muth proposed the Rational Expectations Hypothesis (REH) to represent how the market (an aggregate of its participants) understands and forecasts outcomes. REH imposes internal consistency between the market’s forecasts and “the relevant economic theory” (Muth 1961, p. 316). Read more