by Equilibrium — an assumption making many theories inaccurate For the learning rules we study, the players never converge to any sort of “intertemporal equilibrium”, in the sense that their expectations do not match the outcomes of the game even in a statistical sense … Are these results relevant for macroeconomics? Can we expect insights that hold at the small scale of strategic interactions between two players to also be valid at much larger scales? While our theory does not directly map to more general settings, many economic scenarios – buying and selling in financial markets, innovation strategies in competing firms, supply chain management – are complicated and competitive. This raises the possibility that some important theories in economics may be
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Equilibrium — an assumption making many theories inaccurate
For the learning rules we study, the players never converge to any sort of “intertemporal equilibrium”, in the sense that their expectations do not match the outcomes of the game even in a statistical sense …
Are these results relevant for macroeconomics? Can we expect insights that hold at the small scale of strategic interactions between two players to also be valid at much larger scales?
While our theory does not directly map to more general settings, many economic scenarios – buying and selling in financial markets, innovation strategies in competing firms, supply chain management – are complicated and competitive. This raises the possibility that some important theories in economics may be inaccurate. Challenges to the behavioral assumption of equilibrium also challenge the predictions of the model. In this case, new approaches are required that explicitly simulate the behavior of economic agents and take into account the fact that real people are not good at solving complicated problems.