VALUE IN NEOCLASSICAL ECONOMICS
VALUE IN NEOCLASSICAL ECONOMICS
The neoclassical model is familiar to generations of college students. This chapter reviews the emergence of the neoclassical or “marginalist” school of economics in the late 19th century, and its formal elements and basic mathematics. It notes elements of the theory that are not settled: utility, risk aversion, and time preference, and discusses the critique of the “behaviorist.” The author then tests the neoclassical model as a practical valuation tool for a business, applying it to three actual businesses. This analysis shows the neoclassical model is not a practical valuation tool.
Keywords: neoclassical economics, marginalist school, Alfred Marshall, Leon Walras, Carl Menger, William Jevons, profit maximization, behaviorist school, Daniel Kahneman, Richard Thaler
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