The Behavioral and Experimental Economics group has an influential position in this field in the Netherlands and Europe. CREED, the Amsterdam-based group, focuses particularly on three main projects: economics of political decision making; bounded rationality and institutions and experimental economics. The research of the Rotterdam-based group focuses on two broad themes: decision under risk and uncertainty and intertemporal choice.
This part of the program focuses on nonlinear complexity models as a description of dynamic market phenomena. Are market fluctuations mainly caused by random exogenous shocks or can endogenous nonlinear economic laws of motion explain (a significant part of) observed fluctuations? Nonlinear dynamic deterministic and stochastic economic models are studied theoretically, computationally as well as empirically, attempting to explain important stylized facts observed in real economic and financial time series. Emphasis is given to complex adaptive systems, where markets consist of a large population of agents selecting simple strategies according to their relative success in the recent past. In these evolutionary adaptive systems endogenous variables such as prices and agents’ beliefs co-evolve over time. Applications emphasize behavioral dynamic models in finance and macroeconomics. Emerging properties of complex systems – for example, bifurcations and critical transitions—are used to model empirically observed market phenomena, such as bubbles and crashes, sudden market shifts and financial and economic crises.