The Beauty of Imperfection within Quantitative Economic Modeling

• Autores: Saskia Troy
• Localización: Global Education Magazine, ISSN-e 2255-033X, Nº. 12, 2015
• Idioma: inglés
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• Resumen

  • New forms of risk illustrate the interconnected nature of economic crisis. In the past scholars of economics have studied patterns that cause a behavioral equilibrium that induces no further reaction within the system. Hereby identical agents possess perfect rationality and arrive at shared logical conclusions or expectations about the situation they are in at the particular moment. When these expectations provoke actions that aggregative create a world that values them as predictions, they are in equilibrium. However, there’s now the need to turn to the question of how the actions of individual agents, their strategies and expectations might endogenously change while they adapt to the aggregate patterns they have been creating.