Making sense of the chaos

From a book by J. Doyne Farmer, this podcast provides an overview of complexity economics as an alternative to traditional economic models, emphasising the importance of agent-based modelling, bounded rationality, and the analysis of networks. The author highlights the failures of conventional models in predicting events like the 2008 financial crisis and the economic impact of COVID-19. Furthermore, the text discusses the application of complexity economics to diverse areas such as financial markets, demonstrating how market inefficiencies and the ecology of trading strategies contribute to phenomena like clustered volatility and market crashes. Finally, the excerpts touch upon the potential of complexity economics to address large-scale challenges like climate change through sophisticated, data-driven simulations, advocating for greater investment and a shift in economic thinking.