Complexity in Economics
Economists face a challenge in incorporating real human behavior into models due to its complexity, often relying on rational expectations that fall short. The discussion highlights how complexity economics offers a solution by utilizing computer simulations to better mimic decision-making processes. An example from the housing market illustrates that emotional and irrational factors can influence seller decisions beyond mere monetary interests, emphasizing the need for more nuanced models.In this clip
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EconTalk
Chaos and Complexity Economics (with J. Doyne Farmer)
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