Inductive reasoning and bounded rationality reconsidered

Complex adaptive systems have historically been studied using simplifications that mandate deterministic interactions between agents or instead treat their interactions only with regard to their statistical expectation. This has led to an anticipation, even in the case of agents employing inductive reasoning in light of limited information, that such systems may have equilibria that can be predicted a priori. This hypothesis is tested here using a simulation of a simple market economy in which each agent's behavior is based on the result of an iterative evolutionary process of variation and selection applied to competing internal models of its environment. The results indicate no tendency for convergence to stability or a long-term equilibrium and highlight fundamental differences between deterministic and stochastic models of complex adaptive systems.