The Problem of Indifference and Choice. Answer to Nozick´s Challenge to Austrians

The aim of this paper is to link the Austrian School´s approach to indifference with the mainstream approach. The paper looks critically at an interesting ongoing discussion about the problem of indifference and choice within the Austrian School. The discussion was conducted in response to Nozick (1977) address to representatives of the Austrian school on the problem of indifference, implying the invalidity of the law of diminishing marginal utility in the absence of a presupposition of indifference. This paper briefly introduces the discussion and its main problems. Stated reservations will be replaced by suggested solutions based on the minor modification of the theory of subjective value and on the premise that needs are satisfied by a portfolio of goods over time. The discussion will allow the preservation of elements of Indifference analysis as interpreted by the neoclassical mainstream. However, it will also allow interpretation of the problem of choice based on strict preferences and creates room for Indifference, also from the point of view of the Austrian School of Economics. This is quite a controversial conclusion, but it is a logical consequence of the proposed minor modification in the theory of subjective value.