Paper #: 93-10-063
Neo-classical models in economics look toward the equilibria that result when agents of perfect rationality interact. This approach opens the study of economics to powerful mathematical tools, such as fixed-point theorems and allied techniques, and much of our current understanding of economic processes is a direct consequence of this mathematics. Despite these advances, there remain real economic processes that exhibit complexities not anticipated by perfect rationality models. An understanding of the dynamics of contemporary economies turns on an understanding of non-equilibrium processes such as innovation, emergent organization, changes invoked by speculations and anticipations based on partial knowledge, and the like. In other words, we now have to increase our understanding of non-equilibrium conditions mediated by agents of limited rationality.