Evolutionary Microeconomics and the Theory of Expectations

Potts, J. (2000) Evolutionary Microeconomics and the Theory of Expectations. Discussion Paper No 270, Department of Economics, The University of Queensland.

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Author Potts, J.
Title Evolutionary Microeconomics and the Theory of Expectations
School, Department or Centre Department of Economics
Institution The University of Queensland
Report Number Discussion Paper No 270
Publication date 2000-02-01
Subject 340101 Microeconomic Theory
Abstract/Summary This paper sketches a framework for the analysis of expectations in an evolutionary microeconomics. The core proposition is that expectations form a network structure, and that the geometry of that network will provide a suitable guide as to the dynamical behaviour of that network. It is a development towards a theory of the computational processes that construct the data set of expectations. The role of probability theory is examined in this context. Two key issues will be explored: (1) on the nature and stability of expectations when they form as a complex network; and (2), the way in which this may be modelled within a multi-agent simulation platform. It is argued that multi-agent simulation (a-life) techniques provide an expedient analytical environment to study the dynamic nature of mass expectations, as generated or produced objects, in a way that bridges micro and macroeconomics.
Keyword Microeconomics
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