Title: Economic Systems as Constructively Rational Games: Oh, the Places We Could Go!
Real-world economic systems are historical processes moving forward through time without the support of externally-imposed coordination conditions, such as rational expectations and simultaneous market clearing. Moreover, the decision makers in these systems are forced to be locally constructive; that is, their actions at any given time must be based solely on their own information, beliefs, and physical states. An economic model embodying these two features will be called a constructively rational game. This presentation will discuss how Agent-based Computational Economics (ACE) can be used to develop and explore economic models as constructively rational games to facilitate understanding of real-world economic systems, with a particular stress on macroeconomies.
Leigh Tesfatsion is a Professor of Economics with courtesy appointments as Professor of Mathematics and Professor of Electrical and Computer Engineering at Iowa State University. She is an interdisciplinary researcher whose primary specialty is the study of economic processes as critical components of coupled natural and human systems. In support of this study, she has pursued the development of Agent-based Computational Economics (ACE), the computational modeling of economic processes (including whole economies) as open-ended dynamic systems of interacting agents. Her current work focuses on three research topics: (1) the study of macroeconomies as open-ended dynamic games with constructively rational participants to facilitate the understanding of macroeconomies as historical processes; (2) the study of water and climate change issues with the ultimate goal of facilitating watershed sustainability through community engagement; and (3) the study of new contract designs for electric power markets to facilitate the increased penetration of renewable energy resources. She has published 128 research articles on these and related topics in a variety of journals, edited books, and conference proceedings. For further information about her research and professional service activities, please refer to her full CV.