Economics, Mathematical and Empirical

Abstract

Though its influence is a hidden one, mathematics has shaped our world in fundamental ways. What is the practical value of mathematics? What would be lost if we had access only to common sense reasoning? A three-part answer can be attempted: 1. Because of mathematics’ precise, formal character, mathematical arguments remain sound even if they are long and complex. In contrast, common sense arguments can generally be trusted only if they remain short; even moderately long nonmathematical arguments rapidly become far-fetched and dubious. 2. The precisely defined formalisms of mathematics discipline mathematical reasoning, and thus stake out an area within which patterns of reasoning have a reproducible, objective character. Since mathematics defines the notion of formal proof precisely enough for the correctness of a fully detailed proof to be verified mechanically (for example, by a computing mechanism), doubt as to whether a given theorem has or has not been proved (from a given set of assumptions) can never persist for long. This enables mathematicians to work as a unified international community, whose reasoning transcends national boundaries and survives the rise and fall of religions and of empires. KeywordsPayoff FunctionInvisible HandMortgage MarketGood Response FunctionCommon Sense ReasoningThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.