ABSTRACT
It is difficult to think of another scientific concept which has been used as broadly as entropy. The choice of a probability distribution which minimizes relative entropy subject to constraints, dubbed the maximum entropy formalism (MEF), is a unifying framework for studying statistical mechanics, i.e. the modelling of phenomena consisting of large numbers of interacting components. The MEF has also found hundreds of applications in the social sciences, including economics and econometrics. However, as Zellner [48, p.21] has recently noted, “much more empirical and theoretical work needs to be done to get a ‘maximum entropy, thermodynamic model' that performs well in explaining and predicting the behavior of economic systems.”
