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April  2019, 6(2): 149-158. doi: 10.3934/jdg.2019011

Economic evolution and uncertainty: Transitions and structural changes

1. 

IIESS (UNS - Conicet) and Departmento de Economía, Universidad Nacional del Sur, San Andrés 800, Bahía Blanca 8000, Argentina

2. 

INMABB (UNS - Conicet) and Departmento de Economía, Universidad Nacional del Sur, Av. Alem 1253, Bahía Blanca 8000, Argentina

* Corresponding author

Received  December 2018 Revised  March 2019 Published  April 2019

Economic evolution is said to occur when economic structures change. That is, when the institutional and/or technological rules of the society are replaced by new ones. As with evolutionary phenomena in other fields it is rather impossible to predict such changes.

In this paper we present a simple model of evolutionary changes caused by uncertainty about the possible future states of the economy. Agents faced with uncertainty behave in such a way as to either lead the economy to another state or adjust themselves to the newly known environment. In either case, the change involves the modification of one or more fundamental parameters of the economy. Such modification is what we call an evolutionary change.

We prove an impossibility result, stating that there is no way of coordinating those adjustments as to make true any given forecast. Moreover, we show that uncertainty about the future is a real source of novelty.

Citation: Silvia London, Fernando Tohmé. Economic evolution and uncertainty: Transitions and structural changes. Journal of Dynamics & Games, 2019, 6 (2) : 149-158. doi: 10.3934/jdg.2019011
References:
[1] N. Bostrom, Superintelligence: Paths, Dangers, Strategies, Oxford University Press, 2014. Google Scholar
[2]

A. Brandenburger, The Language Of Game Theory: Putting Epistemics Into The Mathematics Of Games, World Scientific Publishers, Singapore, 2014. doi: 10.1142/8844. Google Scholar

[3]

A. Clark, Economic Reason: the Interplay of Individual Learning and External Structure, in The Frontiers of the New Institutional Economics (eds. J. Drobak and J. Nye), Academic Press, 1997.Google Scholar

[4]

D. Dennett, Darwin's Dangerous Idea, Simon & Schuster, 1995.Google Scholar

[5]

K. Dopfer and J. Potts, The General Theory of Economic Evolution, Routledge, NY, 2007. doi: 10.4324/9780203507407. Google Scholar

[6]

S. Hallegatte, Strategies to adapt to an uncertain climate change, Global Environmental Change, 19 (2009), 240-247. Google Scholar

[7]

S. London, A methodological note about the analysis of the economic growth and environment, MOJ Ecology & Environmental Science, 2 (2017), 00053. doi: 10.15406/mojes.2017.02.00053. Google Scholar

[8]

S. London and F. Tohmé, A Theoretical Approach to Endogenous Development Traps in an Evolutionary Economic System, Advances in Intelligent Systems and Computing, 377 (2015), 255-267. doi: 10.1007/978-3-319-19704-3_21. Google Scholar

[9]

R. Nelson, Recent evolutionary theorizing about economic change, Journal of Economic Literature, 23 (1995), 48-90. Google Scholar

[10] W. D. Nordhaus, Managing the Global Commons: The Economics of Climate Change, MIT Press, Cambridge (MA), 1994. Google Scholar
[11]

D. North, Institutions and economic theory, American Economist, 36 (1992), 3-6. Google Scholar

[12]

R. Pindyck, Climate change policy: What do the models tell us?, Journal of Economic Literature, 51 (2013), 860-872. doi: 10.3386/w19244. Google Scholar

[13]

N. Stern, The economics of climate change, American Economic Review, 98 (2008), 1-37. Google Scholar

[14]

F. Tohmé and S. London, A mathematical representation of economic evolution, Mathematical and Computational Modelling, 27 (1998), 29-40. doi: 10.1016/S0895-7177(98)00042-9. Google Scholar

[15]

S. Vassilakis, Rules for Changing the Rules, Working Paper No. 265, Dept. of Economics, University of Pittsburgh, 1990.Google Scholar

show all references

References:
[1] N. Bostrom, Superintelligence: Paths, Dangers, Strategies, Oxford University Press, 2014. Google Scholar
[2]

A. Brandenburger, The Language Of Game Theory: Putting Epistemics Into The Mathematics Of Games, World Scientific Publishers, Singapore, 2014. doi: 10.1142/8844. Google Scholar

[3]

A. Clark, Economic Reason: the Interplay of Individual Learning and External Structure, in The Frontiers of the New Institutional Economics (eds. J. Drobak and J. Nye), Academic Press, 1997.Google Scholar

[4]

D. Dennett, Darwin's Dangerous Idea, Simon & Schuster, 1995.Google Scholar

[5]

K. Dopfer and J. Potts, The General Theory of Economic Evolution, Routledge, NY, 2007. doi: 10.4324/9780203507407. Google Scholar

[6]

S. Hallegatte, Strategies to adapt to an uncertain climate change, Global Environmental Change, 19 (2009), 240-247. Google Scholar

[7]

S. London, A methodological note about the analysis of the economic growth and environment, MOJ Ecology & Environmental Science, 2 (2017), 00053. doi: 10.15406/mojes.2017.02.00053. Google Scholar

[8]

S. London and F. Tohmé, A Theoretical Approach to Endogenous Development Traps in an Evolutionary Economic System, Advances in Intelligent Systems and Computing, 377 (2015), 255-267. doi: 10.1007/978-3-319-19704-3_21. Google Scholar

[9]

R. Nelson, Recent evolutionary theorizing about economic change, Journal of Economic Literature, 23 (1995), 48-90. Google Scholar

[10] W. D. Nordhaus, Managing the Global Commons: The Economics of Climate Change, MIT Press, Cambridge (MA), 1994. Google Scholar
[11]

D. North, Institutions and economic theory, American Economist, 36 (1992), 3-6. Google Scholar

[12]

R. Pindyck, Climate change policy: What do the models tell us?, Journal of Economic Literature, 51 (2013), 860-872. doi: 10.3386/w19244. Google Scholar

[13]

N. Stern, The economics of climate change, American Economic Review, 98 (2008), 1-37. Google Scholar

[14]

F. Tohmé and S. London, A mathematical representation of economic evolution, Mathematical and Computational Modelling, 27 (1998), 29-40. doi: 10.1016/S0895-7177(98)00042-9. Google Scholar

[15]

S. Vassilakis, Rules for Changing the Rules, Working Paper No. 265, Dept. of Economics, University of Pittsburgh, 1990.Google Scholar

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