
I'll try to clarify. The model I hinted at was just a very specific example, based on what I've been working on recently, so none of the details should be taken very seriously. In this macroeconomic model, although there is a specific time preference parameter, which more or less correlates with the Austrian concept of pure time preference,

In a modern neoclassical model, the interest rate is determined by both technical factors and time preference. Although some neoclassical economists may have a theory of interest, in the literature It depends on what is in the model. For example, in a specific model of innovation and R & D, r=η/(ε − 1)*L , where η is related

If you don't think I'm correct, I encourage you to email McCulloch. I've corresponded with him before, and he answers emails. That said, I'll try to explain this again. McCulloch is asking whether a particular kind of cardinal representation exists for a given ordinal ranking. This is similar to asking whether a differentiable representation

My point was just that it's a very strict assumption, which is clearly not true for many situations in life. If you read the paper he cites by Pratt and Kraft, you can see more clearly that this is a strange assumption, since, in essence, he is assuming that preference representations look like measures. Why is this realistic? What I originally

Well, he directly states his assumption at the begining of the section. He wants a function that ranks subsets using the relative rankings of their elements. That's not exactly standard. Most utility functions are not measures. It may be plausible in some cases, but it does not serve as a universal counterexample.

I've read McCulloch's work before; thanks for reminding me of it. It deserves more attention, since it's method of utility analysis is very unique. McCulloch's counterexample is not really a counter example. He is imposing very strict and unusual assumptions about the utility function, which most theorists do not impose. Cardinality

An ordinal ranking that satisfies some basic and intuitive criteria has a continuous cardinal representation. As for differentiability, this is often not neccessary for many economic models. Therefore, even if you think derivatives are suspicious, many mainstream results would still stand.

[quote]Aggretation is a necessary evil in that what you lose in detailed information gets made up for in managability. So far it's done remarkably well at explaining quantitative movements in variables ex post. Now what we need is to move away from calibration and make some ex ante predictions.[/quote] Being more tractable is not a good justification

[quote]Well many of the assumptions are unfalsifiable, like that consumers maximise their expected utility. I'm not exactly sure how putting constraints on a model derived from that can be criticised when it's exactly praxeology... We find estimates of, say, labour supply elasticity, which if in every case of measurement happens to be negative

[quote]The fact is that many Austrians predicted the housing bubble and they are documented as doing so, their investment choices are fairly irrelevant and as for what is actually relevant to the discussion it should be their actual statemens about the matter.[/quote] Many economists predicted some sort of crash, at varying levels of specificity, not