Man in a changing world: How to coordinate individual plans?

Abstract

In 2022 political issues made significant adjustments to individual economic plans of hundreds of millions of people around the world. Against this background, the idea of industrial regulation is gaining popularity again as a means to overcome the shocks that have arisen. However, how effective is such a mechanism for coordinating efforts to adapt to changes? In our article, we propose to look at the problem through the analysis of two models of man: the entrepreneur in Austrian economics and the limited rational person in the transaction costs economics. Based on the results of the analysis we reconstruct the process of adapting the market (or industry) to the shock using a formalized model of the game theory. The model allows us to demonstrate two key informational problems of adaptation to changes: individuals’ limited rationality and their heterogeneity in terms of “entrepreneurial alertness”. For industrial policy, this means the expediency of comparing the regulatory intervention’s benefits and costs during the shock period, taking into account the entrepreneurs’ advantage over the regulator in the collection and use of dispersed knowledge.