Sublime

emergent phenomena, ergodicity, radical uncertainty, and computational irreducibility.

Realistically, agents not identical, don’t know other agents’ circumstances or likely behavior; or situation complicated and not fully known. There is fundamental uncertainty: Therefore “the problem” is not well-defined; Therefore “rationality” is not well-defined; Therefore “optimal” behavior is not well-defined; Behavior and outcome unlikely to

As a new point of view we turn to bounded rationality, a departure from the mainstream tradition. We no longer can assume that every agent is a perfect calculator. This point of view is given a great deal of emphasis by Herbert Simon. Simon argued that people do not maximize. When they’re forecasting the future, they do not perform the task of

The first is diverse agents. In markets that means people who have different information, time horizons, and rules of behavior. This explains why behavioral biases are not that important. You can have a lot of little mistakes but the market mechanism deals with them effectively.