End of Theory: Financial Crises, the Failure of Economics, and the Sweep of Human Interaction

The book "The End of Theory" discusses why the standard economic model is useless for dealing with financial crises and proposes a new approach called agent-based economics that recognizes that we are humans, not optimizing automatons.

Format: Paperback / softback
Length: 240 pages
Publication date: 02 April 2019
Publisher: Princeton University Press

The human complexities at the heart of today's financial system are a complex and multifaceted issue that requires a comprehensive and nuanced approach. While the economy may have recovered from the Great Recession, the underlying economics still need to be addressed. The book "The End of Theory" by Richard Bookstaber provides a critical examination of why the standard economic model and the theory behind it are inadequate for dealing with financial crises.

Bookstaber argues that the human condition and the radical uncertainty of our world render the standard economic model useless for dealing with financial crises. He proposes a new approach called agent-based economics, which takes as a starting point the fact that we are humans, not the optimizing automatons that standard economics assumes we are.

Bookstaber's book offers a novel perspective and a more realistic framework to help prevent today's financial system from blowing up again. He challenges the historical failure of twentieth-century economics and proposes a new approach that recognizes the inherent complexities of human behavior and decision-making.

One of the key insights of agent-based economics is that it recognizes the importance of social interactions and networks in shaping economic outcomes. Instead of focusing solely on individual actors and their rational choices, agent-based economics takes into account the influence of social norms, cultural values, and collective behavior. This approach allows for a more accurate representation of the complex and dynamic nature of financial markets and the interactions between different actors.

Another important aspect of agent-based economics is that it emphasizes the role of institutions and regulations in shaping economic behavior. Bookstaber argues that the current financial system is characterized by a lack of effective regulation and oversight, which has contributed to the recent financial crises. He proposes a new approach that emphasizes the importance of robust regulations and institutions that can prevent excessive risk-taking and promote stability.

Bookstaber's book also offers practical insights and recommendations for policymakers and financial institutions. He suggests that policymakers should focus on promoting economic growth and stability while also promoting social welfare and equity. He also recommends that financial institutions should adopt a more risk-sensitive approach to lending and investment, and that they should be held accountable for their actions.

In conclusion, the human complexities at the heart of today's financial system require a comprehensive and nuanced approach. Richard Bookstaber's book "The End of Theory" provides a critical examination of why the standard economic model and the theory behind it are inadequate for dealing with financial crises. He proposes a new approach called agent-based economics, which recognizes the importance of social interactions, networks, institutions, and regulations in shaping economic behavior. This approach offers a more realistic framework to help prevent today's financial system from blowing up again and promotes economic growth and stability while also promoting social welfare and equity.

Weight: 380g
Dimension: 157 x 236 x 19 (mm)
ISBN-13: 9780691191850