The End of Theory : Financial Crises, the Failure of Economics, and the Sweep of Human Interaction

"Erudite, fun to read, and sure to be a classic, The End of Theory discards the standard paradigms of economics. Financial crises, Bookstaber argues, are best modeled as they occur in reality: the heuristic interactions of humans in a complex environment."—Darrell Duffie, Stanford Universi...

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Main Author: Bookstaber, Richard
Format: eBook
Language:English
Published: Princeton ; Oxford Princeton University Press 2019, ©2017
Subjects:
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Collection: DeGruyter MPG Collection - Collection details see MPG.ReNa
Summary:"Erudite, fun to read, and sure to be a classic, The End of Theory discards the standard paradigms of economics. Financial crises, Bookstaber argues, are best modeled as they occur in reality: the heuristic interactions of humans in a complex environment."—Darrell Duffie, Stanford University Important and elegantly written.---Jason Zweig, Wall Street Journal -- The End of Theory holds some important lessons for financial markets today. . . . According to Bookstaber, it's time to stop tweaking a 150-year-old model that seems to be getting worse, not better, at predicting crises, and embrace something totally new. Finally, and perhaps most usefully, he challenges the economics profession itself, where too many experts still have way too much faith in their own mathematical infallibility.---Rana Faroohar, Financial Times -- Bookstaber has done a great job of exposing the flaws in dominant economic theories. For anyone concerned with these issues, [The End of Theory] is well worth reading.---John Quiggin, Inside Story, Selected for Askblog’s Books of the year 2017 -- "Greg Mankiw said a decade ago, ‘The fact that modern macroeconomic research is not widely used in practical policymaking is prima facie evidence that it is of little use for this purpose.' In The End of Theory, Richard Bookstaber explains why this is so, and presents an alternative to change this situation. Showing that agent-based modeling provides a way of recognizing patterns that emerge as economic crises develop, Bookstaber's approach should help dampen crises and their impacts. What could be more important?"—Alan Kirman, director of studies, École des Hautes Études en Sciences Sociales and emeritus professor of economics, Aix-Marseille University
An in-depth look at how to account for the human complexities at the heart of today's financial system -- Our economy may have recovered from the Great Recession—but not our economics. In The End of Theory, Richard Bookstaber discusses why the human condition and the radical uncertainty of our world renders the standard economic model—and the theory behind it—useless for dealing with financial crises. What model should replace it? None. At least not any version we've been using for the past two hundred years. Instead, Bookstaber argues for a new approach called agent-based economics, one that takes as a starting point the fact that we are humans, not the optimizing automatons that standard economics assumes we are. Bookstaber's groundbreaking paradigm promises to do a far better job at preventing crises and managing those that break out. As he explains, our varied memories and imaginations color our economic behavior in unexpected hues. Agent-based modeling embraces these nuances by avoiding the mechanistic, unrealistic structure of our current economic approach. Bookstaber tackles issues such as radical uncertainty, when circumstances take place beyond our anticipation, and emergence, when innocent, everyday interactions combine to create sudden chaos. Starting with the realization that future crises cannot be predicted by the past, he proposes an approach that recognizes the human narrative while addressing market realities. Sweeping aside the historic failure of twentieth-century economics, The End of Theory offers a novel and innovative perspective, along with a more realistic and human framework, to help prevent today's financial system from blowing up again.
Physical Description:240 Seiten
ISBN:978-1-4008-8496-4