Human Behavior and Austrian Economics

Abstract

Behavioral economics and Austrian economics feature considerable conceptual differences, making their relationship complex and multifaceted. As both behavioral economics and Austrian economics scrutinize the axiom of human rationality, a combination of these paradigms’ essential features will create considerable academic value-added. There appears to be little doubt that a combination of Austrian economics and behavioral economics could considerably enhance the understanding of humans’ sometimes erratic decision-making under uncertainty as so far as economic models are but an axiomatically simplification of reality.

It was in Ancona, Italy, in December 2015 that I bumped into one of this Festschrift’s fellow authors. For reasons which even several years later still remain unknown to us, the conference we attended, strongly resembled the Annual General Meeting of the John Maynard Keynes Society.

Over dinner (done in style, at least) my fellow author and I discussed the efforts related to organizing an academic conference (needless to say, onAustrian Economics). It was not until we had drinks later that night that the scales fell from our eyes: Why not try and bring the conference to Madrid, i.e., to the “new Vienna” as my dear colleague appropriately referred to it.

It fell upon me to reach out to him who is honoured by this Festschrift. Reply was swift, reply was positive—and no later than autumn 2017 the inaugural Madrid Conference on Austrian Economics was held on the Vicálvaro campus of Universidad Rey Juan Carlos. That was when I first met Jesús Huerta de Soto.

Of course, I had heard the anecdotes long before we finally met. He would inevitably reach to his pocket, people claimed, seize a golden coin—and toss it to the ground, delightedly bathing in his audience’s reaction, the amazement, and the emotions.