Reference no: EM131766920

Alchian (1950) quotes Tintner who advanced the most powerful argument against the neoclassical assumption of highly rational, profit maximizing entrepreneurs. Tintner's proof contained which argument(s):

Under uncertainty each action that is chosen can be identified with a distribution of potential outcomes - not with a unique outcome

Under uncertainty, more than one outcome might materialize for any given action (though only one does and that one outcome cannot be foreseen)

Implicit in uncertainty is the consequence that the subjective distributions of potential outcomes overlap.

All of the above combine to prove that "profit maximization" is an meaningless guide to behavior under uncertainty