The 16th international conference of the Charles Gide Association for the Study of Economic Thought will take place at the University of Strasbourg, 14–16 April 2016. This conference is organised by the laboratory Bureau d’Economie Théorique et Appliquée (BETA).
This international conference will propose sessions on the theme “expectations, conjectures and coordination”, although any other proposal in the fields of the history of economic thought and philosophy of economics is also welcome.
Expectations, conjectures and coordination
Contemporary economic analysis was born with the study of strategic interactions between individuals. At the turn of the 17th and 18th centuries, Boisguilbert placed the issue of the available information and of expectations at the core of his explanation of economic fluctuations. For Boisguilbert, expectations of future prices formed by agents on agricultural markets can prove either stabilising or destabilising, depending on whether the economy is in a situation of free trade or prohibition.
Later, Smith warned us about market exchange: “it is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest”. Here, the issue is about an interpersonal relationship: a consumer who would count on the acquisition of a good thanks to the benevolence of a producer is most likely to see his conjecture invalidated. Satisfying one’s needs through market exchange thus requires accurate forecasting of the behaviour of other agents, which is to forecast their own conjectures.
Nearly a century later, but from a quite similar perspective, Cournot’s law of demand raised the issue of price expectations in the functioning of markets. He established an empirical relation between the price of a good and its demand function: “a commodity is usually more demanded when it is less expensive”. Cournot even went further: not only does each seller anticipate the reactions on the side of the buyers, but he also needs to conjecture about actions on the side of the other sellers. With Cournot, information and expectations henceforth became at the centre of individual decisions. What ensues from this is a conception of market equilibrium as the result of interactions between strategic behaviours established by each other.
With Keynes’s parable of the beauty contest, the coordination mechanism not only applies to the results of other agents’ behaviour, but calls into question the very foundation of these results: how does an individual anticipate that the other individuals will form their own expectations?
Last, with the rational expectations approach launched by Lucas, the issue of strategic interactions has been extended to the coordination between public authorities and private agents.
With this theme, we propose to raise the issue of conjectures and expectations along complementary lines of research. A first line of inquiry, for example, would question the way economists suppose economic agents shape their forecasts. On which basis of knowledge? And which kind of behaviour on the part of the other individuals do they conjecture? A second line of research could investigate how the question of market equilibrium has been addressed in different times and places. How have these expectations led to a specific market result? And how do individuals coordinate themselves in favour of any particular equilibrium? A third line of inquiry, which directly ensues from the previous ones, would address the issue of state intervention. How is the state able to influence the market equilibrium resulting from the interactions between individual decisions in transforming the way these forecasts are elaborated and coordinated?
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