Policy Consequences of Multiple Equilibria and the Indeterminacy of Economic Outcomes in a Boundedly Rational World: Closing the System with Non-Economic Variables

In the conventional economic wisdom, the notion of unique equilibria that are efficient and Pareto optimal dominates the modeling discourse. Hebert Simon proposed an alternative analytical framework where the notion of multiple and sustainable equilibria is critical. Multiple equilibrium is the crucial stylized fact of economic life that requires better understanding and modeling. Of particular significance, Simon touched on the importance of...