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ANTS AND NONOPTIMAL SELF-ORGANIZATION: LESSONS FOR MACROECONOMICS

Published online by Cambridge University Press:  18 September 2014

Alan Kirman
Alan Kirman*
Affiliation:
GREQAM, Aix Marseille University and EHESS
*
Address correspondence to: Alan Kirman, 721 Chemin de Saint Marc, 13410 Lambesc, France; e-mail: alan.kirman@univ-amu.fr.
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Abstract

This paper suggests that we need an alternative approach to economic modeling in general, and macroeconomic modeling in particular, if we are to capture salient characteristics of recent economic developments. Rather than focusing on models built on the basis of isolated, rational, optimizing agents, we should recognize that much simpler individuals following basic rules can collectively generate complex behavior. We have lessons to learn from studying the behavior of social insects for example. Noisy systems of interactive agents can generate aggregate phenomena such as sudden changes in the state of an economy or market, with no external shock. I give two examples of simple models of financial markets to illustrate this but would argue more generally that such models are indispensible if we are to understand aggregate economic phenomena.

Keywords

InteractionRationalityNoiseSocial InsectsFinancial Markets

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Type
Articles
Information
Macroeconomic Dynamics , Volume 20 , Issue 2: Complexity in Economic Systems , March 2016 , pp. 601 - 621
Copyright
Copyright © Cambridge University Press 2014 

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