Invisible Hand

Notes

Claim

The invisible hand is a famous argument made by Adam Smith that claimed that out of selfish Incentives shape behavior by making certain actions more attractive we could achieve prosperity.

Explanation

Why it matters

Examples

For example, the bread maker wants to sell more bread, so they are incentivized in creating bread both in quantity and quality so that it would sell, and in a competitive price too. It's not because they are generous that we reach a situation of abondence of food in good prices, but rather because they are selfish. This argument relies on everyone competing equally Competition without chances of Moral Hazard.

Supporters

Opposers

For example, if the bread maker can become a monopoly and eliminate their competition they could produce a low amount of bread in high prices that would benefit their pocket but not the general welfare.

Open questions

Visual

Overview

🔼Topic:: Market Dynamics and Competition ↩️Origin:: Adam Smith (philosopher) 🔗Link::

==⚠ Switch to EXCALIDRAW VIEW in the MORE OPTIONS menu of this document. ⚠== You can decompress Drawing data with the command palette: 'Decompress current Excalidraw file'. For more info check in plugin settings under 'Saving'