Coping with the Complexity of Economics

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Marisa Faggini, Thomas Lux
Springer Science & Business Media, May 5, 2009 - Science - 170 pages
Throughout the history of economics, a variety of analytical tools have been borrowed from the so-called exact sciences. As Schoe?er (1955) puts it: “They have taken their mathematics and their ded- tive techniques from physics, their statistics from genetics and agr- omy, their systems of classi?cation from taxonomy and chemistry, their model-construction techniques from astronomy and mechanics, and their methods of analysis of the consequences of actions from en- neering”. The possibility of similarities of structure in mathematical models of economic and physical systems has been an important f- tor in the development of neoclassical theory. To treat the state of an economy as an equilibrium, analogous to the equilibrium of a mech- ical system has been a key concept in economics ever since it became a mathematically formalized science. Adopting a Newtonian paradigm neoclassical economics often is based on three fundamental concepts. Firstly, the representative agent who is a scale model of the whole society with extraordinary capacities, particularly concerning her - pability of information processing and computation. Of course, this is a problematic reduction as agents are both heterogeneous and bou- edly rational and limited in their cognitive capabilities. Secondly, it often con?ned itself to study systems in a state of equilibrium. But this concept is not adequate to describe and to support phenomena in perpetual motion.
 

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Contents

Evolution of Trust in Economic Systems
3
Keynes Hayek and Complexity
19
A look at the relationship between industrial dynamics and aggregate fluctuations
33
Quantum Physics and Financial Markets
50
Quantumlike Viewpoint on the Complexity and Randomness of the Financial Market
51
Classical and QuantumLike Randomness and the Financial Market
67
New Empirical Approaches to Complex Economic Dynamics
78
Examination of the CostofCarry Formula for Futures Contracts on WIG20 Wavelet and Nonlinear Cointegration Analysis
79
The Structural Equation Modelling
111
Will house prices rise in 2007? A comparative assessment of house prices in London and Dublin
131
Models of Risk Management and Decision Support
146
Risk Measuremant and Fair Valuation Assessment in the Life Insurance Field
147
Analysis of Qualitative and Quantitative Rankings in Multicriteria Decision Making
157
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About the author (2009)

Thomas Lux is a member of the writing faculty & director of the MFA program in poetry at Sarah Lawrence College. A former Guggenheim fellow, he received the prestigious Kingsley Tufts Award for his most recent collection, "Split Horizon" (1994), which was also a finalist for the Los Angeles Times Book Prize in poetry. His "New & Selected Poems: 1974-1995" was a finalist for the Poet's Prize & the Lenore Marshall/The Nation Award. "The Street of Clocks" is his eighth full-length collection.

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