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Time to abandon group thinking in economics

  • Da Silva, Sergio

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.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 45660.

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Date of creation: 2013
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Handle: RePEc:pra:mprapa:45660
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  1. Da Silva, Sergio, 2009. "Does Macroeconomics Need Microeconomic Foundations?," Economics Discussion Papers 2009-3, Kiel Institute for the World Economy.
  2. Suhadolnik, Nicolas & Galimberti, Jaqueson & Da Silva, Sergio, 2010. "Robot traders can prevent extreme events in complex stock markets," MPRA Paper 23923, University Library of Munich, Germany.
  3. Jean-Philippe Bouchaud, 2008. "Economics need a scientific revolution," Papers 0810.5306, arXiv.org.
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