What Computer Science Can Teach Economics

eldavojohn writes "A new award-winning thesis from an MIT computer science assistant professor showed that the Nash equilibrium of complex games (like the economy or poker) belong to problems with non-deterministic polynomial (NP) complexity (more specifically PPAD complexity, a subset of TFNP problems which is a subset of FNP problems which is a subset of NP problems). More importantly there should be a single solution for one problem that can be adapted to fit all the other problems. Meaning if you can generalize the solution to poker, you have the ability to discover the Nash equilibrium of the economy. Some computer scientists are calling this the biggest development in game theory in a decade."

Comments

Re:The problem is not an efficient algorithm

[Anonymous Coward]

the Austrian school economists (Mises, Menger, et. al) never use any sort of math at all, except in trying to determine things such as the rate of inflation.

That's because their absurd notions don't stand up to mathematical scrutiny.

"We don't use math because what we say can be disproven by math"

Re:another intersection of CS and econ

[John Whitley]

I note that you over-condensed the linked article's statement to a meaning much different than your summation. Some more info from that article:

scientists have proved that it is possible to create complex financial bundles [...] that hide bad assets in such a way that no computer or human can detect the bad assets.

Even worse? Even after a buyer loses their shirt on the investment, it is impossible for the buyer to prove that they were sold junk, which makes it impossible to regulate.

This indicates against allowing complex financial bundles, as they create vulnerabilities in the financial system. More interesting details at the parent article's link, including links to other analysis as well as the original publication.