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.