Method of making economic decisions in a market economy. Ways to regulate economic systems. Types of economic systems

From different types of economies to modern world, perhaps the most popular is the market economy, which is predominantly a capitalist economy and a mixed economy, that is, it is a mixture of capitalism and socialism. At the other end of the spectrum lies traditional economics, a type of economics that is virtually non-existent in the real world as a result economic growth and development.

Traditional Economics Explained

In economic theory, an underdeveloped economy where people still use primitive tools and resort to ancient harvesting methods is called a traditional economy. One of the characteristic features of this type of economy is the extremely low GDP growth or even a complete lack of economic growth. Since this regime largely depends on Agriculture and related industries, it is also called subsistence farming.

While the generally accepted definition of traditional economies revolves around dependence on agriculture, socialist economists believe that such a definition can be considered complete if one adds the fact that these economies have ingrained social attitudes, such that social customs and beliefs play a decisive role in the adoption of economic decisions. Another determining factor is the predominance of the barter system.

In a broad sense, the term is most often used by member countries developed economies for underdeveloped countries. The traditional economy mode was quite popular several centuries ago, when most of the countries depended on agriculture. As countries with traditional economies develop, they acquire capitalist characteristics.

Because social customs and beliefs play an important role in this economic system, the entire community comes together and operates as a single, cohesive unit. However, on the other hand, he has a weak financial base, and the community is more focused on self-sufficiency rather than improving its standard of living.

Examples of traditional economics

No country in the world adheres to a purely traditional economic system today. However, there are some regions that continue to engage in agriculture and allied activities to sustain life. Many people suggest that countries from South Asia and Africa should be classified as traditional economies, but this is technically incorrect.

Most countries in the world today fall into the category developing countries. Even those that are underdeveloped do not technically qualify as traditional economies because they are not entirely dependent on traditional agriculture. Even in countries where the agricultural sector plays a decisive role, primitive methods have been replaced modern methods, which leads to increased production and faster overall economic growth.

As for countries where a significant portion of the population continues to practice primitive farming methods, the list includes the likes of Bangladesh, Burma, Malawi, etc. It must be remembered that these countries are not purely traditional economies. In the true sense of the word, a purely traditional economy is the Inuit, Native Indians, Pygmies and other indigenous tribes for whom the economy is purely self-sufficiency.

There are several different types of economies, each with their own pros and cons. However, in the case of a traditional economy, there seem to be more disadvantages than advantages, and this is why most countries have already turned into market or mixed economies. Interestingly, most of these countries have mixed economy, where agriculture – in its modern form – plays a decisive role.

Advantages

1 . Predefined Work Roles

Occupations are passed on from one generation to another. Thus, work roles are specifically designed and assigned in advance. This way, there is less confusion and everything is clear about what they are assigned to do.

2. Less competition

Because families specialize in their activities and because the same business activities are carried out across generations, there is less competition in the economy. Families monopolize their business and there is no intervention.

3. Less waste or excess production

Only those goods that are needed are produced. The needs of the population are known in advance. This way, less surplus is produced and resources are used optimally. There are no imports or exports from other economies and only available resources are used. Too little wastage of resources. People's needs are limited, unlike modern economy.

4. People support

No one steals another's work in a traditional economy. People support each other, and everyone tries to make efficient use of limited resources. In a traditional economy, people live in less fear. Hence, there is less chance for crime, There is practically no line between rich and poor. The race to accumulate wealth and maintain jobs that characterizes modern economies is not part of traditional economics. People lead a calm life and feel much safer. Each group has a leader whose opinion is final in all socio-economic decisions.

5. Less environmental impact

Since traditional methodology is followed, the impact on the environment is minimal. There is low waste, there is proper allocation of resources, and because the use of technology is low, there is less harm to the environment.

Flaws

1. Slow growth

Traditional economies use primitive production methods and thus do not use modern technologies. They resort to old methods, thereby limiting growth and development. They may also have certain blind beliefs and belief systems that may hamper their overall development.

2. Resistance to change

Tradition and convention are respected. Therefore, people are usually wary of change and do not accept innovations easily. They reject everything new, adhere to historical tradition.

3. Low level life

With limited needs and no advancement in technology, the main motto of members of the traditional economy is survival. A significant part of their daily efforts is devoted to achieving and satisfying their basic needs. Producing higher volumes of goods is difficult to achieve. Thus, the standard of living is low.

4. Fewer amenities

Modern amenities such as running water, electricity and entertainment are missing. In the absence of development in science or technology medical institutions unable to provide adequate service. Knowledge about health and medicine is outdated. Due to the lack of infrastructure, deaths due to disease and animal attacks are quite common.

5. Small freedom

Since work skills are passed on from generation to generation, there is no freedom to choose where to work. Typically, there is a leader whose decision is final. Anyone who does not follow the tradition may also be kicked out of the group. Thus, there is almost no freedom to choose one's profession, and traditions control the lifestyle.

Methods of making economic decisions (r.t.4). Traditional economics. Command economy. Market economy. In accordance with customs and traditions. Through orders and instructions from top to bottom. With the help of the market.

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IN Everyday life We constantly make different decisions without thinking about why some of them are successful and others are unsuccessful. A little reflection shows that in the case of successful decisions, the goal is correctly set, the probability of achieving it is intuitively correctly assessed, and all reasoning is based on the logic of common sense. There is no doubt that intuition, everyday experience and intuition are quite sufficient for solving simple problems of a practical nature in everyday and even managerial activities, which do not require precise analysis and calculation. However, when solving complex management problems in economics and social life, nowadays people rely less and less on experience, intuition and common sense, and turn to precise analysis of the problem, calculations and construction of mathematical models.

This approach to decision analysis was first introduced

accepted within the framework of theory operations research, appeared during the Second World War. Currently, the study of operations from a narrow special theory focused on effective management military actions, turned into a general scientific direction of research. It is related to<<применением математиче ских количественных методов для обоснования решений во всех об ластях целенаправленной человеческой деятельности>>!.

Further development this theory received after the publication by J. von Neumann and O. Morgenstern in 1944 of a work on game theory and economic behavior 2. This theory provides recommendations on how to act rationally in conditions of uncertainty in an economy associated with risk. Thus, to replace practical experience, common sense and intuition come to an accurate calculation of all emerging possibilities, i.e. solutions based on the construction of mathematical models.

Such models, firstly, take into account the consequences of

possible decisions, or their usefulness, secondly, is determined by the

1 Ventzel E. C. Operations research. -M., 1980. - P. 9.

2 Neumann J., Morgenstern O. Game theory and economic behavior. - M., 1970.

the likelihood of their implementation in specific conditions; thirdly, by comparing different alternatives according to the relevant parameters, choice optimal or more preferable solution. IN depending on the nature of the problem, either the maximum or minimum value objective function, although most often we have to limit ourselves to its best or preferred values. IN in the economic sphere, the maximum value will correspond, for example, to obtaining the highest profit, achieving the greatest benefit from a concluded transaction, etc.

Characteristic feature the model under consideration is its ratio

nalyyust, since it is assumed that the subject making the decision reasons and acts reasonably. So face, accept

final decision (DM), as well as his consultants, are idealized, rationally acting subjects who may differ significantly from actual people. Further, it is assumed that both the set goals and the rational choice of solution throughout the entire process remain unchanged.IN concrete reality, one has to reckon with the influence of various kinds of random and unforeseen events that limit the scope of application of rational methods. AND finally, classic model choice is focused on achieving the optimal solution. In practice, one has to be content with preferable or satisfactory solutions.

The abstract nature of the rational model lies in the fact that it is abstracted not only from the characteristics of specific subjects making decisions, but also from an objective assessment of the relationship between the goals pursued by an individual subject or collective (group, class, community). For example, the target function of an entrepreneur for the implementation of a certain project can bring him maximum profit, therefore, from his point of view, it can be considered rational, but environment it can cause irreparable harm. It is also necessary to take into account the relative nature of rationality itself, since a decision considered rational on the basis of given information may not be rational enough given other information.

The most important requirement that any

rational decision is that all alternatives for choosing a solution must be ordered by the appropriate relation preferences, which has the properties definitely

ity, comparability and transitivity. Comparability means that of any two alternatives, one of them must be preferable to the other (in as a last resort- indifferent or identical with the other). Criterion transitivity associated with the requirement of consistency

the value of alternatives. If, for example, the alternative A preferable to alternative IN, and the latter is preferable WITH, then the alternative A would also be preferable WITH. Since each alternative depends on an assessment of its consequences, which are usually called utility, it is necessary first of all to evaluate the parameters of utility.

Such an assessment is directly related to the goals that the subject seeks to achieve, and ideally it should correspond to the maximum utility of his actions. If the goal of a subject is to obtain the greatest income, or the highest effect from the return on investment, or the fastest introduction of new capacities, etc., then its utility function must correspond to the maximum value of the objective function. On the contrary, when he seeks to prevent loss or damage in various types activity, then its objective function should take into account possible risks and their sizes in order to make them minimal. Based on these premises, Neimai and Morgenstern built the first axiomatic theory of utility. As axioms, they chose statements that are generally consistent with intuitive ideas about assessing the consequences of decisions. Each field of activity has its own specific techniques and means for assessing the usefulness of decision outcomes.

Another aspect mathematical model decision making related to

concerned with predicting the likelihood of realizing different choice alternatives or decisions. The assessment of this probability is carried out in accordance with the statistical interpretation of this concept.

The rational choice model assumes that the recipient

the solution chooses the optimal one under all conditions, best rate

actions. However, this assumption does not take into account the fact that people’s behavior contains not only rational, but also nonrational and even irrational components. Therefore, in the decision-making model put forward Nobel laureate in economics by G. Simon for <<административного человека>>, the latter, on the basis of known information, selects not the optimal, but only a satisfactory solution.

The rational choice model is based on certain general principles, which are considered as initial prerequisites for studying economic life. These principles are the result of a systematic synthesis and in-depth analysis of the long-term practice of decision-making by both individuals and firms and other organizations acting as economic entities. They are the basic units market system economy. Some of these principles will seem obvious, others require explanation and argumentation.

How did you make specific economic decisions? To answer this question, consider fundamental principles economic activity associated with the limited resources of society. They are the ones who force people to choose between different goods.

First principle thing is To obtain some benefits, people have to give up other benefits.

If you want to buy a sweater, you should refuse to buy boots if you don't have enough money. State, if exists

threat to his safety, must choose<<пушки>> instead<<масла>>. Here<<пушки>> symbolize the use of a significant amount of its limited resources for military purposes, and<<масло>> - direction

using most of them to increase the well-being of citizens. When making economic decisions, an economic entity must first of all take into account its real capabilities, and then determine what it really needs and only then identify what material benefits it would like to have at its disposal. The relationship between the possible and the necessary serves, as we know, as the most important stimulus for human activity in general.

Moving on to the discussion of the next decision-making principle

ny, it should be recalled that in the first principle we are talking generally about the exchange of material goods, i.e. what must be given up in order to obtain another good. But any good satisfies a certain need and, therefore, has use value; however, it can be exchanged for another good and therefore has exchange value. These considerations are taken into account in the second principle.

Second principle is as follows: the value of a good is determined by what can be obtained from it, and the cost- what the

it should be given away.

The use value of a good or product is measured

its ability to satisfy any need - material or spiritual - when using it. In this case

good acts as a means to achieve some goal. In previous literature, this concept was called use value, which could cause confusion, since the latter term characterizes the individual needs of the subject in upon receipt benefits, and often is not even quantified.

Exchange value good characterizes the relationship, or proportion, between a given good and other goods that can be obtained for it by refusing it.

If we denote this good by A, and another good that

can be obtained at his expense, through IN, then the exchange value can be expressed by the relation TV/pA, Where T And P- corresponding parameters indicating the quantities of goods exchanged. Price

a good as a goal is determined by what must be given for it or what must be given up in order to obtain it at one’s disposal. In the process of exchange, one thus has to make a choice: to give up one good in order to receive another good. Therefore, before making a decision to purchase one good, it is necessary to compare the costs and benefits of another good. Such costs are called alternative, because they characterize costs lost opportunities, i.e. precisely what one has to give up in order to obtain the desired good. Since money is most often used for this, exchange value is expressed in money.

Within the framework of the entire social economy, economists include all goods that are not used for the production of other goods as final goods. Their totality is expressed in the concept of gross domestic product (GDP), which consists of final goods purchased by households (C) and government (G), as well as goods added to firms' investments (J), which also includes net exports (NX) those. difference between export and import. If we denote the totality of all final goods of a country through GDP, then it can be expressed by the formula

GDP = WITH+ G+ 1 + NHK.

Third principle is that When making decisions, rational, or reasonable, people always compare limit values their benefits and costs.

In economics, a decision or action is considered rational

When marginal utility, or the benefit obtained from the use of an additional, marginal unit of consumption will exceed the benefit from the use of a marginal unit of resource. Consequently, resources will be used to produce goods until each additional unit of them brings great benefit than the cost of purchasing them. Marginal benefits or costs are the smallest quantities economists work with when making decisions in specific circumstances. This same practice must be followed by every rationally acting subject.

When making decisions, people primarily pursue their

interests and therefore strive to satisfy their needs in the present. However, they do not forget to take care of the future as well. Therefore, they not only consume existing goods, but also strive to save them for the future and even increase their quantity.

Fourth principle postulates that people must care about the future.

consumption and use in the future. The most important stored goods include fixed capital, i.e. machines, equipment, buildings and structures of the enterprise. Here, the main efforts should be aimed at the rational use of capital and its timely renewal through depreciation charges. Saved goods can also be used as a resource for the production of new goods and often even in larger quantities. Such benefits may primarily include money and other financial resources.

Fifth principle thing is, caring about the future,:lu

they take into account its uncertainty.

Since the future is always uncertain and unknown to anyone, one can only make various assumptions about it. The most important theoretical means of predicting the future are probabilistic methods. They are based on statistical interpretation of past and present events and probable assessment of their implementation in the future. All probabilistic forecasts are based on the same assumption. When making economic decisions about the future, business entities must compare their probabilistic assumptions with the actual results that

which actually arose. Such analysis will help them learn from the discrepancies between their assumptions and reality, and thereby learn from their own mistakes.

Firstly, probabilistic assessments of the future, in turn, rely on adaptive expectations when an economic entity assumes that the same features and development trends that occurred in the past will remain in the future. Secondly, such estimates may be based on rational expectations, when the subject can, to one degree or another, take into account the consequences of the decisions he makes and their impact on future events. A critical analysis of such consequences will give him the opportunity to make adjustments to the decisions made.

In the practice of economic activity, taking into account the uncertainty of future events is achieved by creating insurance stocks, which make it possible to reduce or even eliminate damage in the event of unfavorable developments. The activities of numerous insurance companies and societies are subordinated to the same goal, which undertake to pay certain amounts through insurance premiums for damage incurred to insured persons, enterprises and firms. Another way to account for uncertainty is desire to avoid risk, when the probability of an unfavorable development of events becomes quite high. This trend is clearly visible when investing capital, when foreign companies refuse to invest it in the economies of developing countries. The third method of accounting for non-optional

separation is reduced to maximum savings of resources and minimization of costs, which is usually called economy mode. Such savings make it possible to save resources for unforeseen events in the future.

Sixth principle assumes that "People are responsible for the consequences of their decisions.

Although this principle seems quite obvious, the extent of the answer

responsibility for decisions made in various social

economic systems are far from the same. In a natural economy, full responsibility for decision falls on the individual economic entity, since it is he and his family who are responsible for the success or failure of the decision. In a peasant community

where major decisions are made collectively, all members of the community pay for it. In a centrally planned society, all decisions are made by<<наверху>>, but they fulfill them<<внизу>>, and, in fact, no one bears any responsibility for the decisions.

IN market economy both the individual, the cooperative, and the company are responsible for the decision made with their property. If, for example,

If a business entity receives a loan to open a business, then if the business organization fails, he risks his own property. Thus, a market economy fosters responsibility for decisions made and therefore promotes rational choices and careful consideration of all their consequences.

Seventh principle assumes that “People respond to incentives arising in connection with changes in the prevailing conditions and conditions in the economy.

Whenever they change economic conditions in society, for example, market conditions, taxes rise, production costs rise, etc., rationally acting subjects react to them by making new decisions. For example, when taxes increase, prices for goods rise and, accordingly, demand for goods and business activity. Typically, business entities and the market as a whole are sensitive to changes that arise within the economic system.

When considering the listed principles, we were talking about decision-making by individual economic entities, be it

individual, enterprise or firm. However, in real economic life they all interact with each other, and therefore

Most economic decisions are made jointly, for example by two people in buying and selling, by members of a cooperative, or by a meeting of company shareholders. The result of such interaction and decision making is the exchange of material goods and services between people and the establishment of trade.

Eighth principle reveals the significance of trading for society,

emphasizes that she turns out to be mutually beneficial for its participants.

The need for exchange and trade in labor products is an inevitable result of the increasing division of labor. In ancient agrarian society, as history teaches us, subsistence farming prevailed, in which all the necessary goods of life were produced and consumed by closed households. However, gradually people realized the need to exchange some of their goods for others that they had in excess or were not produced at all. Already the first major division of labor in agriculture into agricultural and livestock labor gave a significant impetus to the development of exchange and trade between pastoral and agricultural tribes. The appearance of craftsmen and their concentration in the first cities accelerated the process of exchange and trade between numerous rural population and urban artisans, who could not exist without exchanging the products they produced for agricultural products. The emergence of craft workshops and the first manufactories ultimately led to industrial production and the emergence of national markets.

Market exchange contributes to the process of further division

labor, because as a result of this, individual producers begin to specialize in what they can do better and more economically than others. The same should be said about enterprises, firms and even individual countries. As a result, both producers and consumers benefit.

Ninth pinch States that the market serves as the most important

way of organizing economic activity.

At first glance, it seems that with decentralized adoption

Without decisions by millions of different economic entities pursuing different goals, no order can arise in the market. But Smith was the first to clearly indicate what exactly<<не видимая рука>> the market contributes to the unification of the efforts of various individuals. We now know that such a unifying force is the price mechanism, which informs society what goods and services are considered valuable and to what extent. And this information serves as an incentive for entrepreneurs to use the most economical means and factors for the production of goods. Prices also affect income distribution. Thanks to this, the market allocates society's limited resources to those who can use them more efficiently. However, the market is not created to fairly distribute the resulting social wealth. This function is called upon to be carried out by the state.

Tenth principle indicates that under certain conditions, the state can intervene in market regulation and have a positive impact on it.

This occurs when the market fails to allocate available resources efficiently. Economists characterize this situation as insolvency, or market failure. A similar situation arises with different external effects for the market, when the actions of some people have a negative impact on the well-being of other people. This is the case in cases of violation of environmental safety by enterprises in the chemical, oil, metallurgical and other industries. In an effort to obtain high incomes, they often do not pay attention to the construction of treatment facilities and thereby harm the natural environment and the people living in it. The market cannot have any impact on such economic entities. The state can force them to allocate the necessary funds for the treatment of industrial waste by adopting laws on the preservation of the natural environment.

Another case of market failure is that it cannot influence the level of prices in it. Such prices are set spontaneously, or spontaneously, as a result of the interaction of its many participants. The ability of some economic entities to establish price levels in the market is characterized as their power over the market. The market itself does not have such power. Its task is to carry out free competition in the market, which is disrupted by the emergence of various monopoly associations on it. In order to create a free competitive environment, the state passes laws limiting the power of monopolies.

The third case of market failure relates to social justice market distribution. As stated above, the function of the market is the efficient distribution of society's limited resources, and not the equal distribution of the products obtained from them. The market gives goods to those who can pay for them, rather than to those who need them most. Ensuring social justice in society is the function of the government, which, through taxation and other social protection measures, somewhat equalizes the income of the population and provides assistance to its least well-off strata.

The economic activity of each country is made up of the work of numerous economic entities, which include individuals, enterprises, firms, companies, etc. Therefore, the decisions they make, together with economic policy and the specific decisions of the government ultimately determine the successes and failures in achieving the overall welfare and standard of living in the country.

There are many attempts to explain the differences in living standards between different countries. This is often explained by reference to economic

the government’s economic policy, the activities of trade unions and the workers themselves in defense of their rights, increased competition with other countries, the presence of minerals, etc. Without denying the well-known dependence of a country’s well-being and its standard of living on these and other reasons, it should be said that the determining economic reason consists of manufacturers social labor.

Eleventh principle States that the standard of living of the population directly depends on the country’s ability to produce goods

and services.

It is well known that the standard of living in different countries is far from the same and even in one country it changes over time. This level depends on the income per person, and the latter, in turn, is determined by labor productivity, namely the number of goods and services produced per unit of time. Consequently, the well-being of a country ultimately depends on the labor productivity of its amateur population.

Twelfth Principle States that prices rise when the government prints too much money.

When excess money is issued, it depreciates and a

inflation. Accordingly, prices rise and money supply in circulation. Such an inflationary spiral can unwind more and more over time and have extremely negative consequences.

negative impact on all phenomena of economic life, as this shows economic history many countries, including ours. If the cause of inflation is so clear, then why do governments have such difficulty eliminating it? As is known, a decrease in inflation rates in the short term is associated with an increase in unemployment, and therefore one has to choose between inflation and unemployment.

In everyday life, we constantly make various decisions without thinking about why some of them turn out to be successful and others unsuccessful. A little reflection shows that in the case of successful decisions, the goal is correctly set, the probability of achieving it is intuitively correctly assessed, and all reasoning is based on the logic of common sense. There is no doubt that intuition, everyday experience and intuition are quite sufficient for solving the simplest problems of a practical nature in everyday and even management activities, which do not require accurate analysis and calculation. However, when solving complex management problems in economics and social life, nowadays people rely less and less on experience, intuition and common sense, and turn to precise analysis of the problem, calculations and construction of mathematical models.

This approach to decision analysis was first undertaken within the framework of the theory operations research, appeared during the Second World War. Currently, operations research has transformed from a narrow, specialized theory focused on the effective management of military operations into a general scientific area of research. It is associated with “the application of mathematical quantitative methods to justify decisions in all areas of purposeful human activity” 1.

This theory received further development after the publication by J. von Neumann and O. Morgenstern in 1944 of a work devoted to game theory and economic behavior. This theory provides guidance on how to act rationally under conditions of risk-related uncertainty in the economy. Thus, practical experience, common sense and intuition are replaced by an accurate calculation of all emerging possibilities, i.e. solutions based on the construction of mathematical models.

In such models, firstly, the consequences of decisions made, or their usefulness, are taken into account, secondly, the probability of their implementation in specific conditions is determined, thirdly, by comparing different alternatives according to the relevant parameters, choice optimal or more preferable solution. Depending on the nature of the problem, either the maximum or minimum value of the objective function will be considered optimal, although most often it is necessary to limit ourselves to the best or preferred values. In the economic sphere, the maximum value will correspond, for example, to obtaining the highest profit, achieving the greatest benefit from a concluded transaction, etc.

A characteristic feature of the model under consideration is its rationality, since it is assumed that the subject making the decision reasons and acts reasonably. Therefore, the final decision maker (DM), as well as his consultants, are idealized, rationally acting subjects who may differ significantly from actual people. Further, it is assumed that both the set goals and the rational choice of solution throughout the entire process remain unchanged. In concrete reality, one has to reckon with the influence of various kinds of random and unforeseen events that limit the scope of application of rational methods. Finally, the classical choice model is focused on achieving the optimal solution. In practice, one has to be content with preferable or satisfactory solutions.

The abstract nature of the rational model lies in the fact that it is abstracted not only from the characteristics of specific subjects making decisions, but also from an objective assessment of the relationship between the goals pursued by an individual subject or collective (group, class, community). For example, the target function of an entrepreneur to implement a certain project can bring him maximum profit, therefore from his point of view it can be considered rational, but it can cause irreparable harm to the environment. It is also necessary to take into account the relative nature of rationality itself, since a decision considered rational on the basis of given information may not be rational enough given other information.

The most important requirement that any rational decision must satisfy is that all decision alternatives must be ordered by the appropriate relation preferences, which has the properties of certainty, comparability and transitivity. Comparability means that of any two alternatives, one of them must be preferable to the other (in the extreme case, indifferent or identical to the other). Criterion transitivity associated with the requirement of a sequence of alternatives. If, for example, the alternative A preferable to alternative IN, and the latter is preferable WITH, then the alternative A will also be preferable to C. Since each alternative depends on an assessment of its consequences, which are usually called utility, it is necessary first of all to evaluate the parameters of utility.

Such an assessment is directly related to the goals that the subject seeks to achieve, and ideally it should correspond to the maximum utility of his actions. If the goal of a subject is to obtain the greatest income, or the highest effect on the return on investment, or the fastest introduction of new capacities, etc., then its utility function must correspond to the maximum value of the objective function. On the contrary, when it seeks to prevent losses or damages in various activities, then its objective function should take into account possible risks and their sizes in order to make them minimal. Based on these premises, Neumann and Morgenstern built the first axiomatic theory of utility. As axioms, they chose statements that are generally consistent with intuitive ideas about assessing the consequences of decisions. Each field of activity has its own specific techniques and means for assessing the usefulness of decision outcomes.

Another aspect of a mathematical decision-making model is concerned with predicting the likelihood of realizing different choice alternatives or decisions. The assessment of this probability is carried out in accordance with the statistical interpretation of this concept.

The rational choice model assumes that the decision maker, under all conditions, chooses the optimal, best course of action. However, this assumption does not take into account the fact that people’s behavior contains not only rational, but also non-rational and even irrational components. Therefore, in the decision-making model put forward by Nobel laureate in economics G. Simon for "administrative person" the latter, on the basis of known information, selects not the optimal, but only a satisfactory solution.

The rational choice model is based on certain general principles, which are considered as the initial premises for the study of economic life. These principles are the result of a systematic synthesis and in-depth analysis of the long-term practice of decision-making by both individuals and firms and other organizations acting as business entities. They are the basic units of the market system of the economy. Some of these principles will seem obvious, others require explanation and argumentation.

How are specific economic decisions made? To answer this question, let's consider the fundamental principles of economic activity related to the limited resources of society. They are the ones who force people to choose between different goods.

The first principle is that To obtain some benefits, people have to give up other benefits.

If you want to buy a sweater, you should refuse to buy boots if you don't have enough money. The state, if there is a threat to its security, must choose “guns” instead of “butter”. Here, the “guns” symbolize the use of a significant amount of its limited resources for military purposes, and the “butter” symbolizes the use of most of them to increase the well-being of citizens. When making economic decisions, an economic entity must first take into account its real capabilities, and then determine what it really needs and only then identify what material goods it would like to have at its disposal. The relationship between the possible and the necessary serves, as we know, as the most important stimulus for human activity in general.

Moving on to the discussion of the next principle of decision-making, it should be recalled that the first principle generally deals with the exchange of material goods, i.e. what must be given up in order to obtain another good. But any good satisfies a certain need and, therefore, has use value; however, it can be exchanged for another good and therefore has exchange value. These considerations are taken into account in the second principle.

The second principle is this: the value of a good is determined by what can be obtained from it, and its value is determined by what should be given for it.

The use value of a good or product is precisely measured by its ability to satisfy any need - material or spiritual - when using it. In this case, the good acts as a means to achieve some goal. In previous literature, this concept was called use value, which could cause confusion, since the latter term characterizes the individual needs of the subject in receiving benefits, and often is not even quantified.

Exchange value good characterizes the relationship, or proportion, between a given good and other goods that can be obtained for it by refusing it.

If we denote this good by A, and other benefits that can be obtained at his expense, through IN, then the exchange value can be expressed by the ratio TV/pA, Where type - corresponding parameters indicating the quantities of goods exchanged. The value of a good as a goal determines what must be given for it or what must be given up in order to obtain it. In the process of exchange, one thus has to make a choice: to give up one good in order to receive another good. Therefore, before deciding to purchase one good, it is necessary to compare the costs and benefits of another good. Such costs are called alternative, because they characterize costs lost opportunities, i.e. exactly what one has to give up in order to get the desired good. Since money is most often used for this, exchange value is expressed in money.

Within the framework of the entire social economy, economists include all goods that are not used for the production of other goods as final goods. Their totality is expressed in the concept of gross domestic product (GDP), which consists of final goods acquired by households (C) and the government (b), as well as goods added to the investments of firms (G), this also includes net exports (N10, those. difference between export and import. If we denote the totality of all final goods of a country through GDP, then it can be expressed by the formula

The third principle is that When making decisions, rational, or reasonable, people always compare the marginal values of their benefits and costs.

A decision or action is considered rational in economics when the marginal utility, or the benefit obtained from the use of an additional, marginal unit of consumption, will exceed the benefit from the use of a marginal unit of resource. Consequently, resources will be used to produce goods until each additional unit of them brings more benefit than the cost of their acquisition. Marginal benefits or costs are the smallest quantities economists work with when making decisions in specific circumstances. This same practice must be followed by every rationally acting subject.

When making decisions, people primarily pursue their own interests and therefore strive to satisfy their needs in the present. However, they do not forget to take care of the future as well. Therefore, they not only consume existing goods, but also strive to save them for the future and even increase their quantity.

The fourth principle postulates that people must care about the future.

Such care is manifested, firstly, in the simple storage of goods for their future consumption or use. The longer the shelf life of a good, the easier it is to make a decision about the possibility of its consumption and use in the future. The most important stored goods include fixed capital, i.e. machinery, equipment, buildings and structures of the enterprise. Here the main efforts should be aimed at the rational use of capital and its timely renewal through depreciation charges. Saved goods can also be used as a resource for the production of new goods, and often even in larger quantities. Such benefits may primarily include money and other financial resources.

The fifth principle is that, When caring about the future, people take into account its uncertainty.

In the practice of economic activity, taking into account the uncertainty of future events is achieved by creating insurance stocks, which make it possible to reduce or even eliminate damage in the event of unfavorable developments. The activities of numerous insurance companies and societies are subordinated to the same goal, which undertake to pay certain amounts through insurance premiums for damage incurred to insured persons, enterprises and firms. Another way to account for uncertainty is desire to avoid risk, when the likelihood of an unfavorable development of events becomes sufficiently high. This trend is clearly visible when investing capital, when foreign companies refuse to invest in the economies of developing countries. The third way to take uncertainty into account is to maximum savings of resources and minimization of costs, which is usually called economy mode. Such savings make it possible to save resources for unforeseen events in the future.

The sixth principle suggests that people are responsible for the consequences of their decisions.

Although this principle seems quite obvious, the degree of responsibility for decisions made in various socio-economic systems are far from the same. In a subsistence economy, full responsibility for the decision made falls on the individual economic entity, since it is he and his family who are responsible for the success or failure of the decision. In a peasant community, where major decisions are made collectively, all members of the community pay for it. In a planned centralized society, all decisions are made “at the top”, and they are executed “at the bottom”, and, in fact, no one bears any responsibility for the decisions.

In a market economy, both the individual, the cooperative, and the company are responsible for the decision made with their property. If, for example, a business entity received a loan to open a business, then if the business fails, he risks his own property. Thus, a market economy fosters responsibility for decisions made and therefore promotes rational choice and careful consideration of all their consequences.

The seventh principle suggests that people respond to incentives arising in connection with changing conditions and circumstances in the economy.

Whenever economic conditions in society change, for example, market conditions, taxes rise, production costs rise, etc., rationally acting subjects react to them by making new decisions. For example, when taxes increase, the prices of goods rise and, accordingly, the demand for goods and business activity decreases. Typically, business entities and the market as a whole are sensitive to changes that arise within the economic system.

When considering the listed principles, we were talking about decision-making by individual economic entities, be it an individual, an enterprise or a firm. However, in real economic life they all interact with each other, and therefore most often economic decisions are made jointly, for example by two people in buying and selling, by members of a cooperative or by a meeting of shareholders of a company. The result of such interaction and decision-making is the exchange of material goods and services between people and the establishment of trade.

The eighth principle reveals the importance of trade for society, emphasizes that she turns out to be mutually beneficial for its participants.

The need for exchange and trade in labor products is an inevitable result of the increasing division of labor. In ancient agrarian society, as history teaches us, subsistence farming prevailed, in which all the necessary goods of life were produced and consumed by closed households. However, gradually people realized the need to exchange some of their goods for others that they had in excess or were not produced at all. Already the first major division of labor in agriculture into agricultural and livestock labor gave a significant impetus to the development of exchange and trade between pastoral and agricultural tribes. The appearance of artisans and their concentration in the first cities accelerated the process of exchange and trade between the large rural population and urban artisans, who could not exist without exchanging the products they produced for agricultural products. The emergence of craft workshops and the first manufactories ultimately led to industrial production and the emergence of national markets.

Market exchange facilitates the process of further division of labor, since as a result, individual producers begin to specialize in what they can do better and more economically than others. The same should be said about enterprises, firms and even individual countries. As a result, both producers and consumers benefit.

The ninth principle states that The market serves as the most important way of organizing economic activity.

At first glance, it seems that with decentralized decision-making by millions of different economic entities pursuing different goals, no order can arise in the market. But A. Smith was the first to clearly point out that it is the “invisible hand” of the market that contributes to the unification of the efforts of various individuals. We now know that this unifying force is the price mechanism, which informs society what goods and services are considered valuable and to what extent. And this information serves as an incentive for entrepreneurs to use the most economical means and factors of production of goods. Prices also affect income distribution. Thanks to this, the market allocates society's limited resources to those who can use them more efficiently. However, the market is not designed to fairly distribute the resulting social wealth. The state is called upon to perform this function.

The tenth principle states that under certain conditions, the state can intervene in market regulation and have a positive impact on it.

This occurs when the market fails to allocate available resources efficiently. Economists characterize this situation as insolvency, or market failure. A similar situation arises with different externalities for the market, when the actions of some people have a negative impact on the well-being of other people. This is the case in cases of violation of environmental safety by enterprises in the chemical, oil, metallurgical and other industries. In an effort to obtain high incomes, they often do not pay attention to the construction of treatment facilities and thereby harm the natural environment and the people living in it. The market cannot have any impact on such economic entities. The state can force them to allocate the necessary funds for the treatment of industrial waste by adopting laws on the preservation of the natural environment.

The third case of market failure relates to social justice market distribution. As discussed above, the function of the market is to allocate society's limited resources efficiently, rather than to equally distribute the products derived from them. The market gives goods to those who can pay for them, rather than to those who need them most. Ensuring social justice in society is the function of the government, which, through taxation and other measures social protection somewhat equalizes the income of the population and provides assistance to its least affluent layers.

The economic activity of each country is made up of the work of numerous economic entities, which include individuals, enterprises, firms, companies, etc. Therefore, the decisions they make, together with economic policies and specific government decisions, ultimately determine the successes and failures in achieving the overall welfare and standard of living of the country.

There are many attempts to explain the differences in living standards in different countries. This is often explained by reference to economic policy governments, the activities of trade unions and workers themselves in defense of their rights, increased competition with other countries, the presence of minerals, etc. Without denying the well-known dependence of a country’s well-being and its standard of living on these and other reasons, it should be said that the determining economic reason is productivity social labor.

The eleventh principle states that The standard of living of the population directly depends on the country's ability to produce goods and services.

The twelfth principle states that prices rise when the government prints too much money.

When excess money is issued, it depreciates and a inflation. Accordingly, prices rise and the money supply in circulation increases. Such an inflationary spiral can unwind more and more over time and have an extremely negative impact on all phenomena of economic life, as the economic history of many countries, including ours, shows. If the cause of inflation is so clear, then why do governments have such difficulty eliminating it? As is known, a decrease in inflation rates in the short term is associated with an increase in unemployment, and therefore one has to choose between inflation and unemployment.

Ventzel E.S. Operations research. - M., 1980. - P. 9.
Neumann J., Morgenstern O. Game theory and economic behavior. - M., 1970.

1. People traditionally produce only those goods and services necessary for survival that were produced by their ancestors for many centuries. This type of economy is close to subsistence farming.

1. The decision on the issue is made at its own discretion by the state. This solution does not always coincide with people's needs. Commands from above (from government) come down (to enterprises). They must comply with the state plan, which outlines what to produce. The state guarantees the manufacturer the sale of products. Due to the approximate planning (plans), there is always a shortage (shortage) of some goods and an excess of others.

1. Decisions on the issue are made by individuals and firms at their own discretion. The state (government) does not give them commands. The market forces us to produce only those goods that people need, otherwise they cannot be sold. The manufacturer is at great risk, since there is no guarantee that he will be able to sell his product.

2. The issue is resolved in the same way from generation to generation, automatically, according to tradition. In countries with such economies technical progress not developed. The standard of living is consistently low.

2. The issue is resolved in the same way from generation to generation, automatically, according to tradition. In countries with such economies, technological progress is not developed. The standard of living is consistently low.

2. The issue is resolved by the state. The main thing for enterprises is to fulfill the state plan. Due to the focus of production on the plan, and not on profit, enterprises have little interest in updating production equipment or improving the technology for manufacturing goods. All products of enterprises belong to the state.

3. The issue is resolved according to customs. Trading rules have long been established. Prices change infrequently

2. The issue is resolved by individuals and firms who choose the most advanced production technology, because all produced goods belong not to the state, but to the manufacturer, and the more of them, the richer he is. Competition (rivalry) between firms producing homogeneous products forces them to look for the best ways production.

3. The issue is resolved according to customs. Trading rules have long been established. Prices change infrequently

3. The issue is resolved by the state. All goods produced are distributed by the government on the principles of equality. Prices for goods are set by the state and are not revised for a long time.

3. The issue is being resolved by private producers. Goods are produced for those who have the money to buy them, and if goods are in short supply, those who can pay more will get them. There is inequality because people have different incomes. Free prices apply: they are not set by the state, but depend on the demand for goods offered for sale and their quantity. A shortage of a product causes its price to increase, which means that those who have money will buy it.