Response to Tullock

Author:

Frömmel TomášORCID

Abstract

This paper reacts to Tullock’s suggestion that entrepreneurs should study the Austrian business cycle theory to obtain the ability to predict the consequences of the central bank policy. Game theory is used to explain why entrepreneurs have no incentive to study Austrian economics. The equilibrium outcome of the non-repeated game, which is perfectly rational, is for no entrepreneur to study the Austrian theory since no entrepreneur himself may change the course of the cyclical fluctuations of the economy. The repeated game predicts that entrepreneurs may benefit from studying the Austrian theory only in a small economy with a sufficiently low interest rate.

Publisher

Cevro Institut

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