I've thought a lot about equilibrium recently. At the same time that I'm reading some excellent game theory books (including a nice little book by David Kreps that is accessible to non-economists), I am also studying agent-based modeling.
Game theory uses equilibrium heavily and distinguishes a billion different types of equilibria. Agent-based modeling rejects equilibrium as central to economic analysis.
Oh yeah, and I just got done with a full course on general equilibrium theory. Throw that on top of my skepticism of equilibrium as an important concept and you have one confused grad student.
This jumble has me thinking heavily about the meaning of equilibrium. Is it useful? When? How do we need to adjust our understanding? What is the role of disequilibrium?
Then I re-watched a speech by Mario Rizzo title "A Better Concept of Coordination." In it, Rizzo is trying to clarify our understanding of coordination and equilibrium. He is trying to understand the relationship between aspects of the economy that lead to equilibration, or better coordination, and disequilibration, or when people's plans don't align.
For Rizzo, equilibration and disequilibration are like yin and yang. They cannot be separated.
I just love the quote he starts out with from Oskar Morgenstern.
Economics' open-endedness makes it fascinating. A closed/Walrasian system is not only impossible, but deathly boring pic.twitter.com/vlB0X7D4iF
— Brian Albrecht (@BrianCAlbrecht) January 5, 2015
I'm not sure I have any more insight to add to Rizzo's speech. It is clear to me that a focus on equilibrium has killed much of the interested parts of economics. What is a better option to replace it? I don't know. I just enjoyed the speech and thought you might too.