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Is the market really a good teacher?

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Authors: Seppecher, Pascal1 pascal.seppecher@univ-paris13.fr, Salle, Isabelle2, Lang, Dany1
Source: Journal of Evolutionary Economics. Mar2019, Vol. 29 Issue 1, p299-335. 37p. 10 Charts, 5 Graphs.
Subject Terms: *Evolutionary economics, *Business cycles, *Macroeconomics, *Stock-flow analysis, *Decentralization in management
Abstract: This paper proposes to model market mechanisms as a collective learning process for firms in a complex adaptive system, namely Jamel, an agent-based, stock-flow consistent macroeconomic model. Inspired by Alchian's (J Polit Econ: 5(3):211–221, 1950) "blanketing shotgun process" idea, our learning model is an ever-adapting process that puts a significant weight on exploration vis-à-vis exploitation. We show that decentralized market selection allows firms collectively to adapt their overall debt strategies to the changes in the macroeconomic environment so that the system sustains itself, but at the cost of recurrent deep downturns. We conclude that, in complex evolving economies, market processes do not lead to the selection of optimal behaviors, as the characterization of successful behaviors itself constantly evolves as a result of the market conditions that these behaviors contribute to shaping. Heterogeneity in behavior remains essential to adaptation. We come to an evolutionary characterization of a crisis, as the point where the evolution of the macroeconomic system becomes faster than the adaptation capabilities of the agents that populate it. [ABSTRACT FROM AUTHOR]
Database: Entrepreneurial Studies Source
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PubType: Academic Journal
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  Data: <searchLink fieldCode="AR" term="%22Seppecher%2C+Pascal%22">Seppecher, Pascal</searchLink><relatesTo>1</relatesTo><i> pascal.seppecher@univ-paris13.fr</i><br /><searchLink fieldCode="AR" term="%22Salle%2C+Isabelle%22">Salle, Isabelle</searchLink><relatesTo>2</relatesTo><br /><searchLink fieldCode="AR" term="%22Lang%2C+Dany%22">Lang, Dany</searchLink><relatesTo>1</relatesTo>
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  Data: <searchLink fieldCode="JN" term="%22Journal+of+Evolutionary+Economics%22">Journal of Evolutionary Economics</searchLink>. Mar2019, Vol. 29 Issue 1, p299-335. 37p. 10 Charts, 5 Graphs.
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  Data: *<searchLink fieldCode="DE" term="%22Evolutionary+economics%22">Evolutionary economics</searchLink><br />*<searchLink fieldCode="DE" term="%22Business+cycles%22">Business cycles</searchLink><br />*<searchLink fieldCode="DE" term="%22Macroeconomics%22">Macroeconomics</searchLink><br />*<searchLink fieldCode="DE" term="%22Stock-flow+analysis%22">Stock-flow analysis</searchLink><br />*<searchLink fieldCode="DE" term="%22Decentralization+in+management%22">Decentralization in management</searchLink>
– Name: Abstract
  Label: Abstract
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  Data: This paper proposes to model market mechanisms as a collective learning process for firms in a complex adaptive system, namely Jamel, an agent-based, stock-flow consistent macroeconomic model. Inspired by Alchian's (J Polit Econ: 5(3):211–221, 1950) "blanketing shotgun process" idea, our learning model is an ever-adapting process that puts a significant weight on exploration vis-à-vis exploitation. We show that decentralized market selection allows firms collectively to adapt their overall debt strategies to the changes in the macroeconomic environment so that the system sustains itself, but at the cost of recurrent deep downturns. We conclude that, in complex evolving economies, market processes do not lead to the selection of optimal behaviors, as the characterization of successful behaviors itself constantly evolves as a result of the market conditions that these behaviors contribute to shaping. Heterogeneity in behavior remains essential to adaptation. We come to an evolutionary characterization of a crisis, as the point where the evolution of the macroeconomic system becomes faster than the adaptation capabilities of the agents that populate it. [ABSTRACT FROM AUTHOR]
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      – Type: doi
        Value: 10.1007/s00191-018-0571-7
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      – Code: eng
        Text: English
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        PageCount: 37
        StartPage: 299
    Subjects:
      – SubjectFull: Evolutionary economics
        Type: general
      – SubjectFull: Business cycles
        Type: general
      – SubjectFull: Macroeconomics
        Type: general
      – SubjectFull: Stock-flow analysis
        Type: general
      – SubjectFull: Decentralization in management
        Type: general
    Titles:
      – TitleFull: Is the market really a good teacher?
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            NameFull: Seppecher, Pascal
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            NameFull: Salle, Isabelle
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              M: 03
              Text: Mar2019
              Type: published
              Y: 2019
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            – TitleFull: Journal of Evolutionary Economics
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