Friday, January 19, 2007

The Alchian Approach

This is how Susan Woodward described the famous economist Armen Alchian:

Hirshleifer approached price theory as pure
geometry. You lay out the axioms, you state the
postulates, then you prove the theorems and the
lemmas and the converses and give the students some
real world problems to apply them to. And you never
introduce a new idea, especially a hard idea like rent,
without having thoroughly laid the groundwork for
it before you do that. Whereas the Alchian approach
is “Oh, here’s an idea. Let’s walk around the idea
and see what it looks like from all of its sides. Let’s
tip it over and see what’s under it and what kind of
noise it makes when you turn it over. Let’s light a
fire under it and just see what happens. Drop it ten

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