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Assumed
type of behavior/action
1.
Utility- self-interest
orientation: Agents are self-interest seeking e.g. agents want more of what
they like.
2.
Perfect rationality, e.g.
the ability of agents to maximize utility is unlimited.
3.
Risk neutrality.
4.
Preferences are transitive
and stable.
5.
Firms maximize profits,
e.g. they are perfectly efficient
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Assumed
type of behavior/action
1.
Utility- self interest
orientation: If emphasizing strategic behavior we may use the terms; opportunism,
moral hazard.
2.
Bounded rationality, e.g.
the ability of agents to maximize utility is limited.
3.
Risk
aversion, risk neutrality, or risk lover.
4.
Preferences are unstable
(may change fast).
5.
Organizations tend to be
efficient rather than wasteful, Knight [1941, 252].
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Assumed
conditions (case, setting, and economy)
1.
No externalities and
exchange is voluntary.
2.
No asset specificity i.e.
no quasi rents.
3.
No public goods.
4.
Separability of production.
5.
No connectedness of
exchange.
6.
No distortions, e.g. taxes.
7.
Homogeneous goods.
8.
All utility can be measured
in pecuniary terms.
9.
No measurement problems.
10.
Perfect information.
11.
Certainty.
12.
No economics of scale and
scope.
13.
Time is static or only the
dynamic SS is considered.
14.
Human capital can be sold
e.g. slavery is legal.
15.
No crime or war and
litigation is costless.
16.
Perfect competition (price
taking agents).
17.
All property is privately
held.
18.
All assets are priced and
traded in markets.
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Assumed
conditions (case, setting, and economy)
1.
Externalities and exchange
may be involuntary.
2.
Specificity of investment
in production.
3.
Public goods (non-exclusion
and non-rivalry).
4.
Non-separability of
production.
5.
Connectednesses of
transactions, e.g. align capacities, match tolerances, and have components
ready on time.
6.
Distortions, e.g. taxes for
redistribution.
7.
Heterogeneous goods.
8.
Not all of value can be
measured in pecuniary terms.
9.
Measurement problems, e.g.
performance.
10.
Imperfect information e.g.
asymmetric information.
11.
Uncertainty &
complexity of transaction.
12.
Economics of scale and
scope.
13.
Dynamic time, e.g.
frequency and duration of a transaction relation.
14.
Human capital is not
saleable, e.g. slavery is forbidden
15.
Crime, war and litigation
is costly.
16.
Imperfect competition (price
taking- price making).
17.
Not all property is
privately held.
18.
Not all assets are priced
and/or traded in markets.
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