The second is the role of social interactions and social networks in individual decisionmaking and in determining macroscopic outcomes and dynamics. Regarding the first, much of mathematical social science assumes that aggregate efficiency requires individual optimization. The invisible hand requires rational fingers, if you will. Research assistance from Trisha Brandon and David Hines is gratefully acknowledged. This research was partially supported by the National Science Foundation, under grant IRI-9725302.
Inclividual rationality is bounded.
To answer these questions, we have developed a model in which imitation in social networks can ultimately yield high aggregate levels of optimal behavior despite extremely low levels of individual rationality. The fraction of agents who are rational in such an imitative system will definitely affect the rate at which asteady state sets in. Of particular concern are the puzzling dynam- . By any measure, this was a major policy shift. Yet it took nearly three decades for the modal retirement age to fall correspondingly.