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Intermediate Microeconomics: A Modern Approach

Hal R. Varian

posted on 06 September 2002

reviewed by Joe McCauley

A very well-written introduction to the theory of neo-classical economic belief. States the (nonempirical) postulates explicitly (excepting the
postulate of stability), illustrates how this leads to the prediction that regulations reduce efficiency, discusses game theory, law and econ, IT, and
assymetric information. See my review of Microeconomics by the same author. Note also that, as in Microeconomics, there is no discussion of real
empirical data. With only three exceptions there are no graphs obtained from real market data in Intermediate Microeconomics. Also, no mention of
Radner's proof that equilibria make demands of information acquisition and processing on agents that cannot be met even by a Turing machine. Also,
no discussion of the fact that (a) financial market data indicate stochastic dynamic models that have no equilibria either dynamically or statistically,
and (b) when equilibria do occur in stochastic models of financial markets, then they are unstable (financial markets are not discussed in the text
aside from the CAPM: there is no demand for liquidity in neo-classical economic theory, money is unnecessary, as is the Fed). The student should
keep in mind that this is an already-falsified theory (a belief system) that does not describe how any market works in reality. In order to understand
where and why this text goes wrong, read mirowski's Machine Dreams'.