"Friction", or "delay"? Those are different things, especially in control systems ("the invisible hand"). One results in damping, the other results (sometimes) in oscillation.
And I see bounded rationality, but not bounded information. When working with large sums of money I am as rational as I know how to be, but my problem is that my information is not just randomly noisy, it is often bounded in a Byzantine way (is it really an AAA bond? Would Moody's lie to me?).
I worry also that when I must rely upon other people's behavior to infer a large fraction of my information, that it begins to construct what is essentially a dependent utility function -- which, as I understand it, is a bad thing, for the mathematics of microeconomics.
And I see bounded rationality, but not bounded information. When working with large sums of money I am as rational as I know how to be, but my problem is that my information is not just randomly noisy, it is often bounded in a Byzantine way (is it really an AAA bond? Would Moody's lie to me?).
I worry also that when I must rely upon other people's behavior to infer a large fraction of my information, that it begins to construct what is essentially a dependent utility function -- which, as I understand it, is a bad thing, for the mathematics of microeconomics.