Coping with the Complexity of Economics (eBook)

Marisa Faggini, Thomas Lux (Herausgeber)

eBook Download: PDF

2009 | 2009
XIV, 170 Seiten
Springer Italia (Verlag)
978-88-470-1083-3 (ISBN)

Infos

Throughout the history of economics, a variety of analytical tools have been borrowed from the so-called exact sciences. As Schoe?er (1955) puts it: 'They have taken their mathematics and their ded- tive techniques from physics, their statistics from genetics and agr- omy, their systems of classi?cation from taxonomy and chemistry, their model-construction techniques from astronomy and mechanics, and their methods of analysis of the consequences of actions from en- neering'. The possibility of similarities of structure in mathematical models of economic and physical systems has been an important f- tor in the development of neoclassical theory. To treat the state of an economy as an equilibrium, analogous to the equilibrium of a mech- ical system has been a key concept in economics ever since it became a mathematically formalized science. Adopting a Newtonian paradigm neoclassical economics often is based on three fundamental concepts. Firstly, the representative agent who is a scale model of the whole society with extraordinary capacities, particularly concerning her - pability of information processing and computation. Of course, this is a problematic reduction as agents are both heterogeneous and bou- edly rational and limited in their cognitive capabilities. Secondly, it often con?ned itself to study systems in a state of equilibrium. But this concept is not adequate to describe and to support phenomena in perpetual motion.

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Throughout the history of economics, a variety of analytical tools have been borrowed from the so-called exact sciences. As Schoe?er (1955) puts it: "e;They have taken their mathematics and their ded- tive techniques from physics, their statistics from genetics and agr- omy, their systems of classi?cation from taxonomy and chemistry, their model-construction techniques from astronomy and mechanics, and their methods of analysis of the consequences of actions from en- neering"e;. The possibility of similarities of structure in mathematical models of economic and physical systems has been an important f- tor in the development of neoclassical theory. To treat the state of an economy as an equilibrium, analogous to the equilibrium of a mech- ical system has been a key concept in economics ever since it became a mathematically formalized science. Adopting a Newtonian paradigm neoclassical economics often is based on three fundamental concepts. Firstly, the representative agent who is a scale model of the whole society with extraordinary capacities, particularly concerning her - pability of information processing and computation. Of course, this is a problematic reduction as agents are both heterogeneous and bou- edly rational and limited in their cognitive capabilities. Secondly, it often con?ned itself to study systems in a state of equilibrium. But this concept is not adequate to describe and to support phenomena in perpetual motion.

Inhalt

Preface 5
Dedication to Massimo Salzano 8
Contents 11
List of Contributors 13
Part I 15
Evolution of Economic Systems 15
Evolution of Trust in Economic Systems 16
1 Introduction 16
2 Group Mechanisms in Evolution 18
3 Neuroeconomics 19
4 Modelling the Evolution of Trust in Wealth Management 22
5 Results and Discussion 26
6 Conclusions and Future Work 27
7 Acknowledgements 29
References 29
Keynes, Hayek and Complexity 32
1 Introduction 32
2 Some key features of complex systems 33
3 Complex systems and conventional theory 34
4 Keynes and Hayek 37
5 Closing remarks 44
References 45
A look at the relationship between industrial dynamics and aggregate fluctuations 46
1 Introduction 46
2 The model 48
3 The firms’ size distribution 54
4 Conclusions 59
References 60
Part II 63
Quantum Physics and Financial Markets 63
Quantum-like Viewpoint on the Complexity and Randomness of the Financial Market 64
1 Introduction 64
2 Price Phase Space, Modeling of Financial Energy 69
3 The Bohmian Model for Behavior of the Financial Market 71
4 The Bohm-Vigier model for Behavior of the Financial Market 73
References 75
Classical and Quantum-Like Randomness and the Financial Market 78
1 Introduction 78
2 Bell-like Inequalities 83
3 Efficient Market Hypothesis 86
References 87
Part III 89
New Empirical Approaches to Complex Economic Dynamics 89
Examination of the Cost-of-Carry Formula for Futures Contracts on WIG20. Wavelet and Nonlinear Cointegration Analysis 90
1 The cost-of-carry model 90
2 Methodology 92
3 Examination of the cost-of-carry model for FW20 101
4 Final conclusions 116
References 117
A Complex Approach to Estimate Shadow Economy: The Structural Equation Modelling 120
1 Introduction 120
2 Complexity and Economics 122
3 The Structural Equation Approach for Shadow Economy Research 124
4 Advantages and disadvantages of the MIMIC estimates of Shadow Economy 128
5 Conclusions 133
References 136
Will house prices rise in 2007? A comparative assessment of house prices in London and Dublin 140
1 Introduction 140
2 House prices in the UK 142
3 Stock markets and housing markets 145
4 House prices in Ireland 149
5 Conclusions 153
References 154
Part IV 155
Models of Risk Management and Decision Support 155
Risk Measuremant and Fair Valuation Assessment in the Life Insurance Field 156
1 The regulation background in solvency tool 156
2 The fair valuation of the mathematical provision of a life insurance contract 157
3 Cash flows examples 159
4 Risk measurement tools 160
5 Conclusions 161
References 162
Analysis of Qualitative and Quantitative Rankings in Multicriteria Decision Making 164
1 Introduction 164
2 Notations 169
3 Qualitative actual ranking 170
4 Weak consistency and priority vectors 172
5 Intensity vectors and intensity matrices 174
References 176

Produkt-Details

• Erscheint lt. Verlag: 5.5.2009
• Reihe/Serie: New Economic Windows
• Reihe/Serie: New Economic Windows
• Zusatzinfo: XIV, 170 p.
• Verlagsort: Milano
• Sprache: englisch
• Themenwelt: Mathematik / Informatik ► Informatik ► Theorie / Studium
• Themenwelt: Mathematik / Informatik ► Mathematik ► Angewandte Mathematik
• Themenwelt: Mathematik / Informatik ► Mathematik ► Finanz- / Wirtschaftsmathematik
• Themenwelt: Naturwissenschaften ► Biologie ► Humanbiologie
• Themenwelt: Naturwissenschaften ► Biologie ► Zoologie
• Themenwelt: Naturwissenschaften ► Physik / Astronomie ► Astronomie / Astrophysik
• Themenwelt: Naturwissenschaften ► Physik / Astronomie ► Theoretische Physik
• Themenwelt: Naturwissenschaften ► Physik / Astronomie ► Thermodynamik
• Themenwelt: Technik
• Themenwelt: Wirtschaft ► Volkswirtschaftslehre
• Schlagworte: Behavior • Complexity • Complexity of Economics • Complex System • Economic Systems • Information • Keynes
• ISBN-10: 88-470-1083-7 / 8847010837
• ISBN-13: 978-88-470-1083-3 / 9788847010833