The Complexity Era in Economics

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the more realistic sense of individuals who, while they are self-interested, are
also social beings, concerned about others and deriving happiness from
interacting with others.

• Cutting edge researchers are moving away from the assumption of a unique
equilibrium, and are dealing with much more complicated systems that have
multiple equilibria, path dependency, and no clear-cut answer. A complex
economy does not have a single equilibrium; it has many basins of attraction,
and the question researchers ask is which basin is sustainable. In this work
equilibrium is not a state of the economy; the economy is continually in flux.

Combined, these changes can be summarized as a movement in economics from a
textbook economics of rationality, selfishness, and equilibrium to a new economics of
purposeful behavior, enlightened self-interest, and sustainability. Cutting edge work is
work that is helping to move that transformation along.

5. Changes in Research Methods

Another aspect of cutting edge work that is consistent with the complexity era involves
changes in research methods that can serve as a catalyst for many changes in the
profession. For example, advances in computing technology have led to new approaches
such as agent based modeling that allows economists to analyze complicated systems,
with much more complicated interactions. Instead of assuming optimal behavior,
economists are using lab, field and natural experiments to determine what people actually
do. As economists have started to use these new techniques they are taking notice of

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