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Invited Discussion Paper1: Surprise, Surprise from Neoclassical Economics to E-Life2

Published online by Cambridge University Press:  09 August 2013

David Ingram ,
Paul Tayler  and
Michael Thompson
David Ingram
Affiliation:
Willis Re, New York City
Paul Tayler
Affiliation:
National Health Service, UK
Michael Thompson
Affiliation:
International Institute for Applied Systems Analysis, Laxenburg, Austria
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Abstract

We build and describe an agent-based model: the Surprise Game. The game comprises a “world” of 30 firms, each of which has to survive (and, if possible, prosper) in its environment, which is nothing more than the other 29 firms. Each firm has to latch onto one or other of the four strategies that are predicted by the theory of plural rationality but has to relinquish that strategy and latch onto one of the others if it finds itself surprised. This model illustrates the dynamics of the world as described by the theory of plural rationality which are more similar to the dynamics of the actual world than economic models that assume equilibriums that are occasionally disturbed by shocks. This model and the theory of plural rationality provide insights and ideas for further work for actuaries.

Type
Research Article
Information
ASTIN Bulletin: The Journal of the IAA , Volume 42 , Issue 2 , November 2012 , pp. 389 - 411
Copyright
Copyright © International Actuarial Association 2012

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Footnotes

1

This paper presents a new way of thinking about how markets work and different agents react to changing circumstances.

The editor invites readers to submit short discussions and longer articles that develop the ideas in a rigorous scientific direction.

2

First presented at the International Institute for Applied Systems Analysis/Konrad Lorenz Institute workshop – The Human Brain and the Social Bond, Vienna, 2010.

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