Arbeitspapier
Rational heuristics? Expectations and behaviors in evolving economies with heterogeneous interacting agents
We analyze the individual and macroeconomic impacts of heterogeneous expectations and action rules within an agent-based model populated by heterogeneous, interacting firms. Agents have to cope with a complex evolving economy characterized by deep uncertainty resulting from technical change, imperfect information and coordination hurdles. In these circumstances, we find that neither individual nor macroeconomic dynamics improve when agents replace myopic expectations with less näive learning rules. In fact, more sophisticated, e.g. recursive least squares (RLS) expectations produce less accurate individual forecasts and also considerably worsen the performance of the economy. Finally, we experiment with agents that adjust simply to technological shocks, and we show that individual and aggregate performances dramatically degrade. Our results suggest that fast and frugal robust heuristics are not a second-best option: rather they are "rational" in macroeconomic environments with heterogeneous, interacting agents and changing "fundamentals".
- Language
-
Englisch
- Bibliographic citation
-
Series: LEM Working Paper Series ; No. 2017/31
- Classification
-
Wirtschaft
Computational Techniques; Simulation Modeling
Business Fluctuations; Cycles
Financial Crises
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- Subject
-
complexity
expectations
heterogeneity
heuristics
learning
agent-based model
computational economics
- Event
-
Geistige Schöpfung
- (who)
-
Dosi, Giovanni
Napoletano, Mauro
Roventini, Andrea
Stiglitz, Joseph E.
Treibich, Tania
- Event
-
Veröffentlichung
- (who)
-
Scuola Superiore Sant'Anna, Laboratory of Economics and Management (LEM)
- (where)
-
Pisa
- (when)
-
2017
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
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ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Dosi, Giovanni
- Napoletano, Mauro
- Roventini, Andrea
- Stiglitz, Joseph E.
- Treibich, Tania
- Scuola Superiore Sant'Anna, Laboratory of Economics and Management (LEM)
Time of origin
- 2017
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