Complexity Economics: A Different Framework for Economic Thought

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Speaker: Prof W. Brian Arthur, External Professor, SFI

Title: Complexity Economics: A Different Framework for Economic Thought

Abstract: Complexity economics is changing how economics is done. It builds from the proposition that the economy is not necessarily in equilibrium: firms, consumers, and investors constantly change their actions and strategies in response to the outcome they mutually create. This further changes the outcome, which requires them to adjust afresh. Agents thus live in a world where their beliefs and strategies are constantly being “tested” for survival within an outcome or “ecology” these beliefs and strategies together create. Economics has avoided this nonequilibrium view in the past, but if we allow it, we see patterns or phenomena not visible to equilibrium analysis. The result is an economy perpetually inventing itself, creating novel structures, and perpetually open to response.

Background Reading: Complexity Economics: A Different Framework for Economic Thoughts

Slides: