Thursday, August 13, 2015

Giant molecules and representative agents

A good quote from Kevin Hoover via Lars Syll via Brad DeLong:
The reasoning of the representative-agent modelers would be analogous to a physicist attempting to model the macro-behavior of a gas by treating it as single, room-size molecule.

A single molecule cannot tell us about entropic effects and the idea of a gas taking up "volume" is also emergent as molecules are generally treated as having zero volume themselves so that the volume is zero individually, but the aggregate expected value is the volume of an ideal gas.

3 comments:

  1. Yes but then you lose the essential function of a representative-agent model: to mathify your unconscious moral ideological biases.

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    Replies
    1. Nope not unconscious, it's the whole point if economics! The study of what people should do in an economy.

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