Growth, Industrial Externality, Prospect Dynamics, and Well-Being on Markets

Abstract

Functions or 'functionings' enable to give a structure to any economic activity whether they are used to describe a good or a service that is exchanged on a market or they constitute the capability of an agent to provide the labor market with specific work and skills. That structure encompasses the basic law of supply and demand and the conditions of growth within a transaction and of the inflation control. Functional requirements can be followed from the design of a product to the delivery of a solution to a customer needs with different levels of externalities while value is created integrating organizational and technical constraints whereas a budget is allocated to the various entities of the firm involved in the production. Entering the market through that structure leads to designing basic equations of its dynamics and to finding canonical solutions out of particular equilibria. This approach enables to tackle behavioral foundations of Prospect Theory within a generalization of its probability weighting function turned into an operator which applies to Western, Educated, Industrialized, Rich, and Democratic societies as well as to the poorest ones. The nature of reality and well-being appears then as closely related to the relative satisfaction reached on the market, as it can be conceived by an agent, according to business cycles. This reality being the result of the complementary systems that govern human mind as structured by rational psychologists.