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Applied and bridge studies study record
Hollow Win theory & mechanismsThe Epistemic Boundary Theorem: Completing Hayek's Knowledge Argument for System Welfare
STATUS · Manuscript in progressSSRN · Not yet posted
MECHANISM
Identify the incentive structure and the condition that would falsify the claim.
RULE CHANGE
Read the intervention only after the paper shows how the current payoff space fails to support system welfare.
READER USE
Use the summary to see where private gain creates system exposure, then check the study record.
Contribution — what this adds to the conversation
The manuscript makes a major scholarly contribution by completing Hayek's epistemic program, reconciling Hayek with welfare economics, and unifying the SAPM research program. It provides a formal framework for understanding the limits of market mechanisms and the need for external knowledge-aggregation institutions.
WHAT'S NEW · The HEBT is a novel formal theorem derived from Hayek's work but never stated by Hayek or any successor. It identifies and formalizes the structural boundary of the price system's knowledge aggregation, resolving the 80-year standoff between Austrian and Pigouvian traditions. The Domain Identity Corollary and Discovery Failure Corollary are original contributions.
The Hayek Epistemic Boundary Theorem (HEBT) formalizes the structural boundary of the price system's knowledge aggregation: prices aggregate knowledge if and only if it is expressible as willingness-to-pay within a bilateral transaction. For system welfare—commons, future generations, non-priced environmental stocks—the price system provides no signal. This completes Hayek's 1945 argument and provides the theoretical spine for the $72 trillion annual welfare cost quantified across 58 ranked revenue-ratio domains in the SAPM research program.