The Invisible Hand in Economics: How Economists Explain Unintended Social Consequences

This is a book about the most popular, prominent and controversial concept in economics: the invisible hand. The book questions, examines and explicates the strengths and weaknesses of the concept by way of analyzing its paradigmatic examples such as Carl Menger's 'Origin of Money' and Thomas Schelling's famous checkerboard model of residential segregation. Based on this analysis, it provides a fresh look at the philosophical literature on models and explanation and develops a philosophical framework for interpreting invisible-hand type of explanations in economics and elsewhere. Finally, the book applies this framework to recent game theoretic models of institutions and outlines the way in which they should be evaluated.

N. Emrah Aydinonat is Lecturer in Philosophy of Economics and Economic Growth at Ankara University, Turkey.