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Limits and Criticalities of Predictions and Forecasting in Complex Social and Economic Scenarios: A Cybernetics Key

2014

Predictions play a key role in assuring the status of “rationality” in decisions. Nevertheless, in the field of social sciences and economics, predictions fail to correctly depict the oncoming scenarios. Why is it so difficult to achieve quantitative prediction of social and economic systems? Can science provide reliable predictions of social and economic paths that can be used to implement effective interventions? As in the notorious “El Farol bar problem” depicted by Brian Arthur (Am Econ Rev 84:406–411, 1994), the validity of predictive models is more a social issue than a matter of good mathematics. Predictability in social systems is due to limited knowledge of society and human behavi…