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2016 | OriginalPaper | Buchkapitel

Simonian Bounded Rationality and Complex Behavioral Economics

verfasst von : J. Barkley Rosser Jr., Marina V. Rosser

Erschienen in: Essays in Economic Dynamics

Verlag: Springer Singapore

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Abstract

This chapter will consider the importance of Herbert A. Simon as both the discoverer of the idea of bounded rationality and its role in modern behavioral economics and as one of the early developers of complexity theory, especially its hierarchical and computational forms. Bounded rationality was essentially derived from Simon’s view of the impossibility of full rationality on the part of economic agents. Modern complexity theory through such approaches as agent-based modeling offers an approach to understanding behavioral economics by allowing for specific behavioral responses to be assigned to agents who interact within this context, even without full rationality. Other parts of modern complexity theory will also be considered in terms of their relationships with behavioral economics. Fundamentally, complexity provides an ultimate foundation for bounded rationality and hence the need to use behavioral economics.

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Nächstes Kapitel An Alternative Proof of the Theorem of Woodford on the Existence of a Sunspot Equilibrium in a Continuous-Time Model

It must be noted that while Simon received the Swedish Bank Prize in Economic Science in Memory of Alfred Nobel in 1978, usually simply called the “Nobel Prize in Economics,” he was not officially an economist in any way. His PhD from the University of Chicago was in political science, and he never was in an economics department during his academic career. At his death in 2001, he was in four different departments at Carnegie Mellon University, where he had been based since 1949 when it was still the Carnegie Institute of Technology: computer science, psychology, cognitive science, and management, and he had earlier been in the philosophy department as well. The first of these authors remembers well from personal communication with him how much Simon disdained conventional economics, and a number of prominent economists expressed public displeasure when he received his prize in 1978.

These would include at a minimum those that use the words “algorithm,” “information,” or “code length.”

Velupillai (2011, p. 553) has referred to this form of complexity as “Day-Rosser complexity,” even as he strongly advocates the use of more computationally based forms of complexity as being more useful and scientific. For a fuller presentation of Velupillai’s perspective on computational complexity, see Velupillai (2000).

Vladimir Arnol’d (1992) provides a clear and reasoned overview of the mathematical issues involved while avoiding the controversies.

Ralph Abraham (1985) coined the term chaostrophe to describe such combinations, although that has not caught on especially. He also coined the term “chaotic hysteresis” (Abraham and Shaw 1987).

It is often claimed that Schelling used a chess board, however his board was 19 by 19, which makes it a go board, with go’s use of simple black and white stones also fitting the model he developed.

This is a problem that central planners faced: how much time and in what way should planners spend thinking about how they should plan? This problem was discussed in the French and Russian literature on planning, with the French applying the word planification to this process of “planning how to plan,” although that word was also used for both planning in general as well as for the more specific question of dealing with the problem of aggregating micro level plans into a coherent macro whole (Rosser and Rosser 2004, p. 10).

This result is especially significant in that Vernon Smith (1962) has long been an advocate of the idea that free markets work well and lead to rapid convergence in properly structured markets such as double auction arrangements. This insight was a major basis for his receipt of the Nobel Prize in economics, although he clearly understands that markets can behave badly under certain circumstances.

See Rosser (2010) for a discussion of relations between multidisciplinary, interdisciplinary, and transdisciplinary viewpoints. For a discussion of variations on hierarchical relations see Rosser et al. (1994).

This tradition derived from J.S. Mill’s (1843) heteropathic laws that focused on basic chemical interactions where two molecules come together to form a completely different molecule. Lewes (1875) coined the term emergence for such phenomena, with C. Lloyd Morgan (1923) representing its culmination in biological evolutionary theory. In the 1930s this approach would be pushed aside by the neo-Darwinian synthesis (Rosser 2011), which emphasized a reductionist approach to the gene. For further discussion of this point see Rosser and Rosser (2015).

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Titel: Simonian Bounded Rationality and Complex Behavioral Economics
verfasst von: J. Barkley Rosser Jr.
Marina V. Rosser
Verlag: Springer Singapore
Buch: Essays in Economic Dynamics
Print ISBN: 978-981-10-1520-5

Electronic ISBN: 978-981-10-1521-2

Copyright-Jahr: 2016
DOI: https://doi.org/10.1007/978-981-10-1521-2_1

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