Related papers: Dynamic Arrangements in Economic Theory: Level-Agn…
This paper is an original attempt to understand the foundations of economic reasoning. It endeavors to rigorously define the relationship between subjective interpretations and objective valuations of such interpretations in the context of…
Standard economic theory uses mathematics as its main means of understanding, and this brings clarity of reasoning and logical power. But there is a drawback: algebraic mathematics restricts economic modeling to what can be expressed only…
This essay discusses the advantages of a probabilistic agent-based approach to questions in theoretical economics, from the nature of economic agents, to the nature of the equilibria supported by their interactions. One idea we propose is…
In economic theory, an agent chooses from available alternatives -- modeled as a set. In decisions in the field or in the lab, however, agents do not have access to the set of alternatives at once. Instead, alternatives are represented by…
This essay provides a critical overview of the mathematical kinetic theory of active particles, which is used to model and study collective systems consisting of interacting living entities, such as those involved in behavior and evolution.…
System dynamics is a methodology that is widely used in many academic fields. It explains the behavior of social and economic systems with models that capture complex causality and feedback effects. This 'practice paper' discusses the…
We present an overview of some representative Agent-Based Models in Economics. We discuss why and how agent-based models represent an important step in order to explain the dynamics and the statistical properties of financial markets beyond…
Reasoning is a fundamental cognitive process underlying inference, problem-solving, and decision-making. While large language models (LLMs) demonstrate strong reasoning capabilities in closed-world settings, they struggle in open-ended and…
Game theoretic equilibria are mathematical expressions of rationality. Rational agents are used to model not only humans and their software representatives, but also organisms, populations, species and genes, interacting with each other and…
In complex systems, many different parts interact in non-obvious ways. Traditional research focuses on a few or a single aspect of the problem so as to analyze it with the tools available. To get a better insight of phenomena that emerge…
Economies are complex man-made systems where organisms and markets interact according to motivations and principles not entirely understood yet. The increasing dissatisfaction with the postulates of traditional economics i.e. perfectly…
Strategic classification studies the problem where self-interested individuals or agents manipulate their response to obtain favorable decision outcomes made by classifiers, typically turning to dishonest actions when they are less costly…
This article is a follow-up of a short essay that appeared in Nature 455, 1181 (2008) [arXiv:0810.5306]. It has become increasingly clear that the erratic dynamics of markets is mostly endogenous and not due to the rational processing of…
The focus of this paper is to propose a driver model that incorporates human reasoning levels as actions during interactions with other drivers. Different from earlier work using game theoretical human reasoning levels, we propose a dynamic…
Understanding realistic complex systems requires confronting significant conceptual, theoretical and experimental limitations rooted in the persistence of views that originated in the mechanics of simple moving bodies. We define the…
AI and reinforcement learning (RL) have improved many areas, but are not yet widely adopted in economic policy design, mechanism design, or economics at large. At the same time, current economic methodology is limited by a lack of…
Background: There is great interest in agentic LLMs, large language models that act as agents. Objectives: We review the growing body of work in this area and provide a research agenda. Methods: Agentic LLMs are LLMs that (1) reason, (2)…
We review two strands of conceptual approaches to the formal representation of a decision maker's non-knowledge at the initial stage of a static one-person, one-shot decision problem in economic theory. One focuses on representations of…
In dynamic settings each economic agent's choices can be revealing of her private information. This elicitation via the rationalization of observable behavior depends each agent's perception of which payoff-relevant contingencies other…
Dynamical systems are a broad class of mathematical tools used to describe the evolution of physical and computational processes. Traditionally these processes model changing entities in a static world. Picture a ball rolling on an empty…