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Time to abandon group thinking in economics

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  • Da Silva, Sergio

Abstract

Group thinking is the notion that animals do those things that maximize the chance of survival of their species. It is wrong because natural selection does not favor what is good for the group or the species; it favors what is good for the individual. Here, I show through examples how group thinking also pervades economics. In connection with the fallacy of group thinking, I also discuss how economics fails to ground itself in the underlying knowledge provided by biology. I also argue that economists need to redirect their conventional approach to study group behavior. Current macroeconomics is reductionist while the route followed by biology, physics, and chemistry was to resort to a different approach when focusing on macro systems made up of a large number of heterogeneous micro units. The group level pattern self-organizes as it is not encoded directly in the individual-level rules. And here the right mathematical models can help deduce hidden connections between the interactions of individuals and the patterns that emerge at the group level.

Suggested Citation

  • Da Silva, Sergio, 2013. "Time to abandon group thinking in economics," MPRA Paper 45660, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:45660
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    References listed on IDEAS

    as
    1. Da Silva, Sergio, 2009. "Does Macroeconomics Need Microeconomic Foundations?," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-11.
    2. Jean-Philippe Bouchaud, 2008. "Economics need a scientific revolution," Papers 0810.5306, arXiv.org.
    3. Suhadolnik, Nicolas & Galimberti, Jaqueson & Da Silva, Sergio, 2010. "Robot traders can prevent extreme events in complex stock markets," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 389(22), pages 5182-5192.
    4. Jean-Philippe Bouchaud, 2008. "Economics needs a scientific revolution," Nature, Nature, vol. 455(7217), pages 1181-1181, October.
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    Cited by:

    1. Da Silva, Sergio, 2013. "The mutual gains from trade moderate the parent-offspring conflict," MPRA Paper 46627, University Library of Munich, Germany.

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    More about this item

    Keywords

    group thinking; biology; economics;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • Y8 - Miscellaneous Categories - - Related Disciplines

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