THE FALLACY OF COMPOSITION, ITS WIDE-RANGING APPLICATIONS IN ECONOMICS/BUSINESS AND WHY SYSTEMS SCIENCE IS APPROPRIATE FOR ECONOMIC AND BUSINESS RESEARCH

Authors

Jeffrey Yi-Lin Forrest, Slippery Rock UniversityFollow
Joachim Wagner, Leuphana University LueneburgFollow
Jennifer Nightingale, Updated - AISFollow
Huan Guo, Jianghan UniversityFollow
Jennifer Roy, Waynesburg UniversityFollow

Abstract

This paper explores how widely the erroneous logic of reasoning of the fallacy of composition has been employed in many areas of knowledge, especially in economic and business studies. It then shows why systems science and methodology are truly appropriate for investigating organizations, evolutions and interactions of business entities by focusing on emergent macro-level properties that are not explainable by the characteristics of micro-level individuals. To demonstrate the potentially magnificent consequence of this proposal, a theorem of general systems is displayed to confirm how unintended and uncoordinated micro-level individual desires can naturally lead to macro-level phenomena, such as racial segregation and major risks of market fluctuations.

Recommended Citation

Forrest, Jeffrey Yi-Lin; Wagner, Joachim; Nightingale, Jennifer; Guo, Huan; and Roy, Jennifer (2024) "THE FALLACY OF COMPOSITION, ITS WIDE-RANGING APPLICATIONS IN ECONOMICS/BUSINESS AND WHY SYSTEMS SCIENCE IS APPROPRIATE FOR ECONOMIC AND BUSINESS RESEARCH," Pennsylvania Economic Review: Vol. 31: No. 2, Article 3.
Available at: https://digitalcommons.wcupa.edu/pennsylvania-economic-review/vol31/iss2/3