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I think that paper doesn't capture the main reason economists shun simulation.

It is true that economists have an unjustified preference for analytic solutions over numeric solutions.

However, the main reason to avoid simulations, is that the assumption of rational agents is not very amenable to the typical approach of simulation. Any simulation that imposed the assumption of rationality would look very different to the simulations that are usually done.

For example, rational agents make decisions based on future prices. I might decide to build a factory, because I expect positive profits given the future prices of inputs and outputs. But I can only know this if I have myself modeled the entire economy. Economists do this using backward induction. They solve for equilibrium in the future, and work backwards.

Another more basic example is that rational agents naturally form markets. Buying/selling of goods is much more accurately described by a perfect market, than by some random matching with random prices.




Have you ever read the book 'The Origin of Wealth'. It goes to great lengths to discredit such 'rational agent', and to a non-economist like me makes a pretty convincing case. Avoiding simulations because they are not very amenable to the assumption of rational agents says more about economists than the utility of simulations in my opinion.


Why do you presume to talk down to me when you haven't even bothered to address the points in my post (in particular the concrete examples I gave of rational agents vs simulations). I have a PhD in economics, but I don't insist that people take my word for gospel. You on the other hand, seem to think that reading a single book makes you an expert.




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