W. Brian Arthur
Standard economic theory uses mathematics as its main means of understanding,
and this brings clarity of reasoning and logical power. But there is a
drawback: algebraic mathematics restricts economic modeling to what can be
expressed only in quantitative nouns, and this forces theory to leave out
matters to do with process, formation, adjustment, creation and nonequilibrium.
For these we need a different means of understanding, one that allows verbs as
well as nouns. Algorithmic expression is such a means. It allows verbs
(processes) as well as nouns (objects and quantities). It allows fuller
description in economics, and can include heterogeneity of agents, actions as
well as objects, and realistic models of behavior in ill-defined situations.
The world that algorithms reveal is action-based as well as object-based,
organic, possibly ever-changing, and not fully knowable. But it is strangely
and wonderfully alive.
Read the full article at: arxiv.org