Making Sense of Chaos: A Better Economics for a Better World

When a house is put on the market, the seller looks for recent sales of comparable houses and marks his or her own house up by a small amount, typically about 5 per cent. Then if the house doesn’t sell after a month, the seller marks it down by about 10 per cent, and continues marking it down until either the house sells or is taken off the market.

Imitation and trial- and-error are examples of common heuristics that work well in many different contexts.

normal-form games always have what is now called a

If the real economy is the metabolism of civilization, and the financial system its enteric nervous system (its gut brain), then scientific models are an important component of civilization’s nascent cerebral cortex. Just as the cerebral cortex enables us to make sense of our environment, detect and avoid dangers, plan ahead and reason, scientific

Forty per cent of global photosynthesis is now required to support human civilization.

Complexity economics, conversely, assumes from the outset that agents are boundedly rational, meaning they make imperfect decisions and have limited ability to reason.

In what are called Heterogeneous Agent New Keynesian (HANK) models there is a continuous distribution of different households, ranging from rich to poor.

To make the green-energy transition rapidly and cheaply, we need reliable models, based on empirical data, that allow us to predict the likely outcomes of each possible course of action.

Complicated means that something has many moving parts, whereas complex means it exhibits emergent behavior – that is, it does things that are not easily predicted a priori.