![]() ![]() It is an arbitrary parametrization of the complex, dynamic functioning of a competitive, decentralized market economy. If the characteristics of economic individuals evolve as part of competitive market interactions, taking them as an analytical starting point is not just impractical. They offer innovative bases for observational inquiry into complex economic systems. The concepts of entropy and mutual information offer very general, non-parametric, informational measures of those associations: How much of our ignorance or lack of knowledge about individual values of a given variable is removed once we observe individual values of other variables. The paper looks to information theory to develop observational tools enabling characterizations of those systemic regularities and of the reduced-form associations they define between observable individual characteristics. ![]() This alternative is based on the recognition that the observable empirical regularities upon which we may ground our understanding of the functioning of economic systems are generally systemic and independent of much of the fine-grained detail of individual behavior, knowledge, and interactions. The paper discusses how a wide and plural range of contributions to economic thought have effectively advanced an alternative methodological foundation for economic analysis.
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