"This maximum entropy view reproduces the basics of the utility maximization model without the utility. In fact, utility can be seen as emergent . And since utility, a real number, can be used to describe the solutions (equilibria) we see in the maximum entropy view we see that transitivity (or GARP, both equivalent to real number utility) is an emergent property of the emergent representative agent. This is important: transitivity is explicitly not true of the individual agents -- they have random consumption baskets that they have revealed they prefer! Their preferences are not transitive -- they aren't even stable! Agent 9000 prefers A to B one day and B to A another."The representative agent is not real but a composite of all the diverse individuals in the economy and therefore the behaviour of the representative agent is emergent.
Friday, September 11, 2015
Information Transfer Economics: The emergent representative agent
Information Transfer Economics: The emergent representative agent.