Beliefs, Norms, and Markets. Editorial

The papers retained for the special issue address concerns that naturally arise when one weakens the hypotheses underlying most of mainstream economic theory, in particular, the representative agent assumption. This assumption, indeed, obscures one of the most important facts about socio-economic life: The interactions among individuals are mostly local, in space and time. Thus, information transmits slowly from agent to agents. The actions from one agent affect the other agents at different points of time and therefore, in different contexts. This creates a fundamental heterogeneity even among otherwise identical individuals. Small effects can have large consequences; rationality becomes elusive as no agent can built a sufficiently comprehensive mental image of the world to do more than purposely react to local circumstances; learning may be spurious and unable to converge towards any, by force exceedingly complex, true model of the economy. In such a context theoretical enquiries, but also empirical work, are forced to abandon many of the intellectual maps and certitudes of neoclassical theory to enter what is still largely terra incognita.