ABSTRACT
In a recent article about the new economic geography, Paul Krugman (1994) posed the intriguing question: How complex is the economic landscape? Although economics can truthfully claim that it attempts to study human beings engaged in a relatively simple activity - the exchange of goods and services - various complications still arise. For example, human beings are often assumed to behave in identical, mechanical ways. Unfortunately such tidy notions as perfect, deductive rationality simply break down in many common decision situations. Human agents cannot rely upon other agents to behave in a simple, rational, predictable manner. The real economic landscape turns out to be much more complicated. Economic agents must resort to educated guesswork in a world of subjective beliefs, where there is little room for well-defined premises and perfectly logical choices. On such an uncertain landscape, very few problems are simple because most are illdefined.
