Cassey Lee

Bounded Rationality and the Emergence of Simplicity Amidst Complexity

The purpose of this essay is to explore the relationship between the simple and the complex in economics by anchoring our analysis on bounded rationality. Much of the conventional literature focuses on ‘un‐bounded rationality’ of the rationality‐as‐consistency variety. Theorizing of bounded rationality tends to assume that the problem to be solved is independent of the nature of bounded rationality. Following the insights from the works of Herbert Simon and contributions from outside economics, both bounded rationality and the environment are inextricably linked. The boundaries between bounded rationality and its environment can shift. The form in which bounded rationality is found depends on the complexity of the environment. Furthermore, if local interactions between bounded rational agents result in the formation of hierarchies – the complexity of the collective system will change. Whether this will occur depends on the nature of bounded rationality at the individual level.

Determinants of Singapore's Outward FDI

Outward foreign direct investment (OFDI) has been an important element in Singapore’s economic strategy since the 1990s, with the government providing direct and indirect support to the internationalization process. Recent OFDI trends indicate that China has become an important destination for Singapore. In ASEAN, Singapore’s main investment markets are Indonesia, Malaysia and Thailand. Singapore’s OFDI has important sectoral dimensions, supported by evidence from econometric analysis. It is also important to distinguish between OFDI stock and flows.

Short-run and long-run causalities between happiness, income and unemployment in Japan

This article examines the short-run and long-run causal interactions between happiness and two economic variables in Japan, namely, unemployment and income. Results suggest that whilst more rapid economic growth and lower levels of unemployment are important in raising people’s well-being in the short run, it is the relative growth performance of the economy that matters in the long run.

A Review of the Recent Literature on the Institutional Economics Analysis of the Long-Run Performance of Nations

This paper reviews the recent (post-2000) literature which assesses the importance of institutions as a factor determining cross-country differences in growth rates or in the contemporary level of “prosperity”. It first sketches how institutional economics has evolved. It then examines critically the methods of analysis employed in the recent literature. The paper finds that this literature has made a major contribution to the analysis of the causes of economic growth but the relative importance of institutions as a determinant of long-run growth and prosperity is still a wide open question.