Developing a Micro-Founded Theory of Economic Evolution

Establish a rigorous, micro-founded theory of economic evolution that explains how and why economic systems increase their structural complexity through the production of new knowledge, resolving the outstanding debate over the mechanisms driving such evolutionary processes.

Background

The paper situates entropy as a tool for analyzing both macro- and micro-economic phenomena and cites prior literature on economic evolution. It highlights that while many economists view economic evolution as an increase in structural complexity driven by knowledge production, there is no consensus on the precise mechanisms or microfoundations underlying this process.

By quoting Raine et al. (2006), the authors explicitly acknowledge that a comprehensive and micro-founded theory of economic evolution is still lacking. Their own work focuses on applying entropy-based approaches to macro and micro settings, but they do not claim to resolve this broader theoretical gap.