Information Recovery Related to Adaptive Economic Behavior and Choice

In this chapter, we emphasize the connection between adaptive economic behavior and causal entropy maximization and suggest methods consistent with information recovery in an open dynamic economic system. This entropy-based causal adaptive behavior framework permits the use of a family of information-theoretic estimation and inference methods as a basis for linking the data and the unknown and unobservable system behavioral parameters. Several econometric models and applications are demonstrated, and economic-econometric implications of the information-theoretic approach are discussed. We end the chapter with a question concerning the use of traditional estimation and inference methods that do not have a connection to economic behavior and choice data.