The Changing Face of Economics: Conversations with Cutting Edge Economists
Richard P. F. Holt
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The interviews and commentary together demonstrate that economics is currently undergoing a fundamental shift in method and is moving away from traditional neoclassical economics into a dynamic set of new methods and approaches. These new approaches include work in behavioral economics, experimental economics, evolutionary game theory and ecological approaches, complexity and nonlinear dynamics, methodological analysis, and agent-based modeling.
David E. Colander is Professor of Economics, Middlebury College.
J. Barkley Rosser, Jr., is Professor of Economics and Kirby L. Kramer Jr. Professor of Business Administration, James Madison University.
Richard P. F. Holt is Professor of Churchill Honors and Economics, Southern Oregon University.
because people talk to each other and plan where they are going to meet? Game theorists are just inherently not as fascinated about people coordinating through simple communication even though as an empirical reality this swamps all other forms of signaling as ways people convey information. My comments here may partly be my retroactively reconstructing what some of the resistance is to my current work. the changing face of economics 140 In reference to Schelling’s work that cheap talk may at
seem to undercut these. Would you agree that the endowment effect of loss aversion undercuts continuity, Matthew rabin 147 that transitivity is undercut by time inconsistency, and that completeness is undercut by projection and lies? No. No? Let’s start with the ‹rst one. Why doesn’t the endowment effect undercut continuity? Maybe it undercuts differentiability. Continuity is a necessary condition for differentiability. Yeah, but logically you can have a continuous function that isn’t
for losing something. Doesn’t this evidence fundamentally undercut continuity? I refuse to think that this is the important focus. People have started to write down completely rational choice versions of loss aversion. All you have to do is to introduce a reference to do that. Now there are particular ways in which endowment effect and loss aversion are, in fact, not rational. But, in fact, what we’re seeing is largely seeded by a real aspect of preferences, a mistake of various sorts. Part of
1997a). How do you see the Santa Fe Institute having changed over the ten-year period between the two volumes? I think initially it was much more interested in time series work. Then, the interest shifted more toward evolutionary agent-based work. It is possible that much of the time series work went proprietary—like the Prediction Company. (I can imagine comedians saying that any of the stuff that had commercial value went commercial.) I think that there were a lot of statistical mechanics type
can be pushed. When you look more carefully at those scalings, you see that they don’t scale like a power law, or at least not very well. If you look at them in different frequencies, then the power laws have self-similarities embedded in them. So if you look at monthly, weekly, daily, or hourly data, the tails get thinner. Monthly returns have much longer tails than hourly returns, which is inconsistent with a self-similar process. I think one has to be very careful handling this stuff. Didn’t