1.5.6. UNCERTAINTY AND PROBABILITY PRINCIPLE
Uncertainty and probability always accompany human action in the markets, therefore without taking them into account it is impossible to operate successfully for a sufficiently long period of time. This is caused by the very nature of human reasoning and the fundamental human inability to accurately predict the future state of markets. Moreover, according to the institutional and environmental principle, markets are constantly under the influence of various institutions and environmental factors. For these reasons, all market agent decisions and actions, and hence all market processes and phenomena, are essentially probabilistic, so they can only be adequately described by applying probabilistic mathematical methods and models. On the same grounds, demand and supply functions should also be described in terms of probability distributions.
To introduce some certainty, let us note that the first five principles, along with the axiom, constitute the basis for building a market model in which probabilistic effects are absent or not explicitly considered. We will call such a model classical because of its certain similarity to concepts of both classical economic theory and classical mechanics. Adding the sixth principle (the uncertainty and probability principle) to this base provides a basis for building a full-fledged probabilistic theory, which is naturally broader in nature and has much greater opportunities for further development. Obviously, from the methodological point of view, the classical model can be considered as a fairly good initial approximation of the probabilistic theory, which makes it possible to quantify the probabilistic effects by comparing the results of classical and probabilistic calculations. As a matter of fact, this exact possibility is the justification for building and using the classical model.
We believe that these six general principles can serve as a good basis to describe fully and adequately enough the main structural and dynamic properties of market economic systems and market processes in them. These principles and their rationale will be further discussed in more detail on several occasions. And the accuracy of the probabilistic economics built in this way and the limits of its applicability should and will, naturally, be determined in this study by comparing the results of calculations carried out using the numerical methods of this theory with the corresponding experimental data.