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NEOCLASSICAL ECONOMICS AND
GAUGE THEORY 
Problem 
Economic theory is based around
the hidden assumption that consumer tastes are absolutely ‘stable’ over time
despite the fact that a world with static tastes cannot even be considered a
plausible simplification of the world in which we live. Many rationalizations
have been given for this fiction which are at times
both ingenious and embarrassing. The key problem for economic theory is that
the field simply failed to develop mathematical methods for analyzing changes
in dynamic preferences. 
Partners, Sponsors, and Hosts 
Alfred P. Sloan
Foundation, Harvard University Department of Economics,
National Bureau of Economic Research, Pia N. Malaney (collaborator). Richard
Freeman. 
Challenge 
Create a new ‘upgrade’ of the foundations of intertemporal economic theory which incorporates taste
change. 
Customized Toolkit 
For this problem we chose an ambitious approach
using modern gauge theory developed within particle theory, relativistic
physics, and differential topology/geometry. 
Solution 
We
discovered that neoclassical economics is built around a naturally occurring
(infinite dimensional) principal bundle and a naturally occurring (finite
dimensional) vector bundle. We then went on to show that parallel translation
on these bundles defines a solution to the changing preference problem in the
first case and the index number problem in the later case. In the first case,
the bundle appears to be without a distinguished choice of connection.
However we showed that a slight augmentation of the bundle has a
distinguished connection. We used this connection to write down the first
dynamic extension of the ‘True’ or ‘Economic’ Konus
index. 
Lectures, Publications,
Articles, Reports 
Video I: “A
Science Less Dismal” Video II: “Gauge
Theory and Inflation” Video III: “A
New Marginalism: Gauge Theory in Economics” [Pia Malaney presenting] Announcements for past talks on the subject are
maintained at universities like Dartmouth,
and UIUC. 
Contact 
If you are interested in this topic, we invite
you to contact us at gauged_markets@ericweinstein.net 

email: webmaster@ericweinstein.net
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