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Economic Schools - Coggle Diagram

- - - - only saw institutions as outcomes of formal collective decisions
- - - - known as entrepreneurial profit by Schumpeter
      - Overtime, as innovational technologies are copied, the profits adjust back to a normal level
      - this is the most important and powerful factor - even more powerful than price completion
- - - - Keynes observed that all goods were not necessarily consumed and that the difference (savings) needed to be invested
        
        if everything that is produced can be sold and if all productive inputs including the labour force are to be employed
        
        full employment
        
        However this is no certainty over whether savings will equal investment - especially when those who invest and those who save are not one and the same
        
        this is because depending on the speculation of values of goods - pricing and other factors could change depending on the economic status of the country/market in the future
        
        the future is full of uncertainty - uncertainty contributes massively to the future of economies
        
        to avoid uncertainty, economists, using logical mathematics, calculate the probability of events to occur within the economy
        
        this is called risk
- - - - emphasised that there was cost involved in participating in the market itself e.g finding out about alternate products, spending time and money doing shopping and sometime bargaining for better prices.
        
        essentially it is defined simply as cost of running an economic system
- - - - he critiqued neoclassical belief that humans possessed unlimited capabilities to process certain information or God-like rationality - he believed that given the complexity of the world we have incredibly limited rationality
        
        due to this limited rationality we develop shortcuts that allow us to economise on our mental capabilities
        
        known as heuristics (intuitive thinking)
      - he argues that when we make choices, human beings satisfice ourselves rather than look for the best option