Learning from learning in economics

Abstract

The process of learning, of the growth of subjective knowledge, is always fundamentally the same. It is imaginative criticism . (Karl Popper (1979), p. 148) INTRODUCTION Learning and evolutionary theory in economics are two related research fields that have experienced exponential growth in the last five years. In a sense, this renewed interest in learning theory seems unjustified: the main questions beings addressed are not new. Nash himself wondered how agents would reach the equilibrium he proposed; Muth thought of the rational expectations hypothesis as an extreme counterpart to concurrent macroeconomic models with naive expectations formation, to mention two pioneer examples. In this chapter I review some of the recent contributions to learning theory in games and macroeconomic models. Such a closer look reveals that even if the old questions have not yet been fully answered and it remains difficult - if not impossible - to set a dividing line between rational and adaptive behavior, a theory of the learnable in economics is on its way.

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