Professor Peter J. Boettke

Phone 703-993-1149 (Fairfax)

Phone 703-993-4953 (Arlington)

Office Hours

M-W – Fairfax 9:00-11:00am

T-ThArlington 10:00-12:00

Appointments made in advance are recommended.

Austrian Theory of the Market Process II

Econ 881/Spring 2004

Monday 4:30-7:00pm

Room 318 Enterprise Hall



This course has been designed with the expectation that you are familiar with the basic teachings of the Austrian School of Economics as found in the writings of Menger, Mises, Hayek, Rothbard and Kirzner.  In accordance with that expectation, background reading for the course will consist of Mises’s Human Action, Hayek’s Individualism and Economic Order, Rothbard’s Man, Economy and State and Kirzner’s Competition and Entrepreneurship.  In addition, I have recommended to students prior to the semester break that in preparation for the course you should be familiar with the arguments presented in Philip Mirowski’s Machine Dreams and Bruce Caldwell’s Hayek’s Challenge.  To solidify this background I have arranged for both Mirowski and Caldwell to present papers in my weekly workshop on January 26th and February 2nd respectively and I expect students enrolled in this course to attend those workshops if at all possible.


From this background, we will focus throughout the semester on the role that Austrian economics can play in the reconstruction of modern economic theory and empirical research in the social sciences.  The focus is on engaging the academic community of economists and social scientists and finding opportunities within the current scientific discourse to bring the powerful insights of the Austrian tradition to advance economic knowledge.  The required readings are primarily from non-Austrian sources, but reflect in my opinion the areas of gains from intellectual exchange for students interested in treating the Austrian school as a progressive research program rather than as a chapter in the intellectual history of economic thought.  I will expect that from the lecture titles you will be able to consult the writings of Mises, Hayek, Rothbard and Kirzner to refresh your memory on the conceptual issues under examination in any given lecture.


The class is divided into 3 sections --- with roughly 3 class periods per section.  The first section is devoted to puzzles in economic theory surrounding issues of coordination.  In short, we are taking the claim that economics is a coordination problem seriously and exploring the state of the art in modern theory on agent learning in economic models and the coordination of plans.  The second section of the class will focus on the problems of incorporating institutions into economic analysis.  Once agent learning moves to the forefront of the analysis in addressing coordination, the question of the environment within which agents learn also moves into the foreground of economic analysis.  Finally, the third section will address the nature of empirical research in economics once coordination issues and institutional context become primary points in explaining the pattern of economic activities.  While each of the sections will deal with different literatures in economics and the social sciences, they are linked and the evolutionary potential of the Austrian school will be tested against each of these literatures and the linkages that we are exploring.


I will give a final exam for this course, but this will mainly be a practice run for the Austrian field exam for PhD students and will be a take home exam.  Your grade for the course will be determined primarily on the basis of class participation and your research paper. For your research paper, the goal is to write a paper addressing a real world problem using the theoretical insights of the Austrian School of Economics without a single reference to any historical Austrian figure.  Please consult with me early and often about this project.  Papers will be due on May 3rd, final exam will be due May 10th.  Students will be expected to present their papers to class on May 3rd (15 minutes) and each student will be assigned another paper to prepare a comment on and present (10 minutes).

February 2
Situating Austrian Economics within Modern Social Science
February 9

Information, Expectations and Equilibrium


Stiglitz, Whither Socialism?

February 16
Economic life as a coordination game

Schelling Micromotives and Macrobehavior.

February 23
Learning and Common Knowledge

Fudenberg and Levine, The Theory of Learning in Games, 231-265.

Chwe, Rational Ritual.

March 1
Games and Institutions
McGinnis, ed., Polycentric Games and Institutions, 1-155; 427-521.
March 8
Institutions and Applied Public Economics

McGinnis, ed., Polycentricity and Local Public Economies, 1-160.

March 15
Spring Break
. .
March 22
Theory, History and the Philosophy of Science
March 29
Analytic Narrative
Bates, et. al., Analytic Narrative. 
April 5
Class Canceled – APEE Meetings
. .
April 12
Does the Knowledge Economy Change the Rules of Economic Analysis?
Mokyr, The Gifts of Athena.
April 19

Being Entrepreneurial about Entrepreneurship as a Field of Study


April 26
Possible Futures for Austrian Economics
May 3
Class presentations