Hayek and Kirzner at the keynesian beauty contest

According to Kirzner, entrepreneurs discover new things. Kirzner’s theory thus requires a theory of learning. Hayek provides one. His theory of mind suggests a theory of economic expectations and thus of learning. We briefly review a Hayekian theory of expectations. If Kirznerian entrepreneurs are Hayekian learners, then the larger institutional environment determines what they will learn and whether they will create a tendency toward equilibrium. The theory of’Big Players” shows that discretionary policies lead Kirznerian entrepreneurs (if they are Hayekian learners) to produce the sorts of results Keynes described as a beauty contest. Since “Keynesian” policies often entail discretion, we may draw the following inference: Keynesian policies produce a Keynesian economy.