While reading the excellent book, "Thinking Fast and Slow" I had the following thought, which I hadn't read anywhere. What if there's a form of behavioural bias present not only in individual human heads, as he describes, but that there's a parallel set of behavioural biases at the aggregate level, that is to say, at the macroeconomic level?
And further that these behavioural macroeconomic biases could form the basis of a new model for macroeconomics.
Wasn't this, in a sense, what Keynes was doing in the general theory?
He conjured up a picture of aggregate representations of the key actors and situations in a semi-mathematical model. The scenarios would be behavioural biases (aggregate behaviours which were not as you'd expect from standard utility maximisation of rational economic agents).
Wasn't this, in a sense, what Keynes was doing in the general theory?
He conjured up a picture of aggregate representations of the key actors and situations in a semi-mathematical model. The scenarios would be behavioural biases (aggregate behaviours which were not as you'd expect from standard utility maximisation of rational economic agents).
