We propose a theory of asset pricing based on heterogeneous agents who continually adapt their expectations to the market that these expectations aggregatively create. And we explore the implications of this theory computationally using our Santa Fe artificial stock market. <p> Asset markets, we...</p>

It is often taken for granted that as systems evolve over time they tend to become more complex. But little is understood about the mechanisms that might cause evolution to favor increases in complexity over time. This paper proposes three means by which complexity tends to grow as systems...

This paper draws on modern psychology to argue that as humans, in economic decision contexts that are complicated or ill-defined, we use not deductive, but inductive reasoning. That is, in such contexts we induce a variety of working hypotheses or mental models, act upon the most credible, and...