ABSTRACT
In Chapter 1 we distinguished three purposes of this book. In the preceding chapters of Part I we have dealt with the first purpose, namely to study the methodological strategy of economics and the criticism on the core assumptions about human nature that underpin the economic defense of free market operation. Whereas Chapter 2 identified the Pareto criterion as the moral starting point for the economic defense of the perfect market, Chapters 3-5 discussed some core assumptions with respect to the human nature that sustain perfect market operation: the rationality of economic agents, self-interested preferences and no interdependences among utility functions of different individuals. Experimental research shows behavior in reality that differs significantly from that implied by these assumptions. In particular, both the set of preferences and the belief of economic agents show several boundaries in rationality. Also the
assumption of independent utility functions seems to be too simple, since both positive sentiments (like sympathy) and negative sentiments (like envy) also significantly influence behavior. Furthermore, although economics pays attention to disequilibrium analysis and power concentration, it normally assumes that markets tend to an equilibrium and that firms and other economic actors normally have limited power over the market.
