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Adaptive Behavior, Market Processes and the Computable Approach

Author

Listed:
  • Axel Leijonhufvud

    (Center for Computable Economics)

Abstract

Economies are evolving, complex, adaptive dynamic systems. Yet, economics is committed to a methodology that is quite different from that of other fields, such as ecology or brain research or computer science, in which such systems are studied. Computable economics attempts to reorient economics so as to make feasible a more fruitful interaction with these other fields. A number of problems conveniently ignored in standard theory can be tackled by computer simulation. One may model economic processes rather than just their presumed end-states, for example, and be explicit about the network structure of market interactions. The modelling of trading processes raises a number of problems relating to the treatment of time in economic theory. One particular problem, the 'telescoping' of temporal perspective observed in high inflations, is discussed at length. The explanation previously offered by Maurice Allais is considered and an alternative one suggested.

Suggested Citation

  • Axel Leijonhufvud, "undated". "Adaptive Behavior, Market Processes and the Computable Approach," Working Papers _019, University of California at Los Angeles, Center for Computable Economics.
  • Handle: RePEc:wop:callce:_019
    as

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    File URL: http://cce.sscnet.ucla.edu/papers/axel/adaptive/adaptive.ps
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    References listed on IDEAS

    as
    1. Savit, R., 1989. "Nonlinearities And Chaotic Effects In Options Prices," Papers 184, Columbia - Center for Futures Markets.
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    3. Willey, Thomas, 1992. "Testing for nonlinear dependence in daily stock indices," Journal of Economics and Business, Elsevier, vol. 44(1), pages 63-76, February.
    4. Hinich, Melvin J & Patterson, Douglas M, 1985. "Evidence of Nonlinearity in Daily Stock Returns," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(1), pages 69-77, January.
    5. Hsieh, David A, 1989. "Testing for Nonlinear Dependence in Daily Foreign Exchange Rates," The Journal of Business, University of Chicago Press, vol. 62(3), pages 339-368, July.
    6. Diebold, Francis X. & Nason, James A., 1990. "Nonparametric exchange rate prediction?," Journal of International Economics, Elsevier, vol. 28(3-4), pages 315-332, May.
    7. repec:gue:guelph:1988-15 is not listed on IDEAS
    8. Frank, Murray & Gencay, Ramazan & Stengos, Thanasis, 1988. "International chaos?," European Economic Review, Elsevier, vol. 32(8), pages 1569-1584, October.
    9. Makridakis, Spyros, 1993. "Accuracy measures: theoretical and practical concerns," International Journal of Forecasting, Elsevier, vol. 9(4), pages 527-529, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Adaptive behavior; market networks; trading processes; Computable Economics; time horizon; temporal perspective.;

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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