Complexity and Endogenous Instability
AbstractThe global financial crisis proved the critical impact of the gap between individual rationality and group rationality. This gap is not supposed to arise in a Neoclassical world, but it frequently arises in a world as complex as ours. The paper explores how endogenous instability might arise due to such a gap, and what behavioral rules might help to mitigate its impact.
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Bibliographic InfoPaper provided by ASSRU - Algorithmic Social Science Research Unit in its series ASSRU Discussion Papers with number 1203.
Date of creation: 2012
Date of revision:
fallacy of composition; empathy; n-person prisoner’s dilemma games; n-person zero-sum games; symmetry; the golden rule.;
Find related papers by JEL classification:
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- D87 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Neuroeconomics
- G01 - Financial Economics - - General - - - Financial Crises
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-02-01 (All new papers)
- NEP-GTH-2012-02-01 (Game Theory)
- NEP-HPE-2012-02-01 (History & Philosophy of Economics)
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