I wrote previously that the conclusion of any transaction for the purchase/sale of any good is evidence that for each of the counterparties is an option in which each achieved its aim SUBJECTIVELY BEST under the circumstances with its own efforts and resources.
The word “SUBJECTIVELY” is important in this statement. This is because it allows one to protect oneself from the charge of overinterpreting the result of reasoning. The minimization of inputs (costs), like the maximization of the aim, is a well-known (?) in mathematics problem of determining the so-called FUNCTION EXTREME (maximum or minimum). For this to be possible, it is necessary, first of all, to know the POSITION of a given FUNCTION itself and the value of ALL ITS VARIABLES (the domain of the function). In the analysis of the behavior of market participants, there can be neither knowledge of the function describing the behavior of sellers and buyers, nor knowledge of its variables, which would make it possible to formulate such a categorical conclusion as the LOWEST COST here.
Thus, since we are talking about decisions made on the basis of limited knowledge of many factors of an objective nature, which, if taken into account, could produce an effect more favorable to the decision-maker, and for which he is guided only by his own knowledge and experience and his emotional state AT THE TIME OF DECISION-MAKING, this state of subjective feeling that he has made the best choice should be called OPTIMAL CHOICE IN THESE CONDITIONS. It relies on the fact that when a given effect SATISFIES someone, he or she stops looking for a variant that could produce a more favorable effect.
This is how every person behaves; he chooses an AIM, for example, to buy new shoes, then he chooses the right WAY to achieve it, for example, he goes or drives to some store or mall, there he looks at different models and fashions, and when he likes one, he buys it at a given price, without thinking at all about whether the cost of achieving this aim of new shoes is the lowest. The same goes for buying a car, building a house or going on a trip abroad. The decision is determined NOT ONLY by the PRICE of the good or service, but also by a whole host of non-measurable factors, such as tastes, brand loyalty, fashion, a sense of comfort, a desire to “splurge,” etc. This is why, for example, among different models and classes of cars, some choose a Mercedes, others a bmw, and still others a fiat uno, even though each of these cars provides satisfaction of the same need; to move from place to place independently. For the same reason, some people go on vacation to Mallorca, while others go to the Baltic Sea, sometimes even paying a higher price. WRONG?
By the way; no real existing human being can make decisions that would allow him to achieve MAXIMUM EFFECTS with given inputs, or those that would allow him to achieve a given aim with the MOST inputs. This is EXACTLY how personalistic economics differs from mainstream and fringe economics in that it does not create MATHEMATICAL models of human behavior or so-called collective entities (households, businesses, the state). This is because these MUST assume that man is a rational type who reacts constantly in the same way to economic incentives, having FULL KNOWLEDGE of the situation in the overall market. Otherwise, it would be impossible to build any function describing the model on the basis of which any economic theory is formulated.
Such a type for mainstream economics is the so-called economic man (homo economicus), who seeks to maximize profit or satisfaction, guided only by his own selfish interest. And on top of that, he still has full knowledge of the market situation, and in some models makes decisions for life.
With all the respect due to mathematicians, for whom the only criterion for the correctness of a model is that it should have unambiguous solutions that are stable with respect to initial conditions and parameters according to the rules of syntax, but in economics what matters most is the content of the concepts used, that is, their RELATIONSHIP TO REALITY. This, in turn, results in some formally correct mathematical models not so much simplifying reality by omitting some aspects of it, as they do with respect to the laws of physics, but describing something that has absolutely nothing to do with socio-economic reality.
A glaring example of this is G. Debreu’s Nobel Prize-winning 1958 work “The Theory of Value” and the so-called “mathematical economics” developed from it. (For more, see: https://www.szewczyk.net.pl/wp-content/uploads/2024/03/Debreu.pdf).
By this I do not mean to say that mathematical models in economics are meaningless, on the contrary, in many cases they allow to describe quite accurately various aspects of economic processes and phenomena, allowing to make reliable forecasts. The condition, however, is not only the formal correctness and solvability of the individual equations, but, above all, the SINGLE ECONOMIC CONTENT of the variables used in them, that is, their correspondence to REALITY.