making the move from physics to finance
soncu at pacbell.net
Tue Sep 16 15:35:21 MDT 2003
> The separation theorems are used to show that the
> allocational decisions can be decentralized and made
> molecularly by each individual, and yet arrive spontaneously
> at a general equilibrium (have the system reproduce itself,
> if you want to look at things this way) identical
> to the one resulting from efficiently-planned direct
I agree with most of Julio said. One comment I would like to make is
that Debreu and his fellows were part of a project, which started
probably with the works of John Von Neumann: to show that capitalism, or
market economy in academic jargon, is superior to all other
As far as I can see, Debreu did not start with his axioms and ended up
with the above result, which he did not anticipate before writing down
his assumptions. It is the other way around: he had the result in mind
before he wrote down his assumptions and built his theory in such a way
to obtain the desired result.
The above is not always doable though. Or at least, it is not something
anyone can do. This is where Debreu's "greatness" comes from.
When you have the time, you may want to take a look at Philip Mirowski's
books on the above mentioned project: 1) Machine Dreams and 2) More Heat
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