Cognitive Developments in Economics
Total Page:16
File Type:pdf, Size:1020Kb
Cognitive Developments in Economics Cognitive economics proposes an interdisciplinary approach to the study of human problem-solving, choice, decision-making and change, to explain economic transactions, the nature and evolution of organizations and in- stitutions. This book contains some of the most cutting-edge research in eco- nomics. Leading scholars, including Ulrich Witt, Stanley Metcalfe, Massimo Egidi, Nicolai Foss, Richard Arena and Bart Nooteboom, cover such topics as: • economic methodology • bounded rationality • learning and cognition in firms • institutional economics Cognitive economics contributes to a large spectrum of economic fields such as consumer theory, economics of the firm, economics of innovation, evolutionary economics and experimental economics. This book is particu- larly pertinent given the recent award of the Nobel Prize to Daniel Kahne- man – evidence that this is one of the true frontiers of economic theory today. Salvatore Rizzello is Professor of Economics and coordinator of the Centre for Cognitive Economics at the University of Eastern Piedmont, Italy. Routledge frontiers of political economy 1 Equilibrium Versus Understanding 9 New Keynesian Economics/Post Towards the rehumanization of Keynesian Alternatives economics within social theory Edited by Roy J. Rotheim Mark Addleson 10 The Representative Agent in 2 Evolution, Order and Complexity Macroeconomics Edited by Elias L. Khalil and Kenneth James E. Hartley E. Boulding 11 Borderlands of Economics 3 Interactions in Political Economy Essays in honour of Daniel Malvern after ten years R. Fusfeld Edited by Steven Pressman Edited by Nahid Aslanbeigui and 4 The End of Economics Young Back Choi Michael Perelman 12 Value, Distribution and Capital 5 Probability in Economics Essays in honour of Pierangelo Omar F. Hamouda and Robin Rowley Garegnani Edited by Gary Mongiovi and Fabio 6 Capital Controversy, Post Keynesian Petri Economics and the History of Economics 13 The Economics of Science Essays in honour of Geoff Harcourt, Methodology and epistemology as if volume one economics really mattered Edited by Philip Arestis, Gabriel Palma James R. Wible and Malcolm Sawyer 14 Competitiveness, Localised 7 Markets, Unemployment and Learning and Regional Development Economic Policy Specialisation and prosperity in small Essays in honour of Geoff Harcourt, open economies volume two Peter Maskell, Heikki Eskelinen, Edited by Philip Arestis, Gabriel Palma Ingjaldur Hannibalsson, Anders and Malcolm Sawyer Malmberg and Eirik Vatne 8 Social Economy 15 Labour Market Theory The logic of capitalist development A constructive reassessment Clark Everling Ben J. Fine 16 Women and European Employment 26 Political Economy and the New Jill Rubery, Mark Smith, Colette Fagan Capitalism and Damian Grimshaw Edited by Jan Toporowski 17 Explorations in Economic 27 Growth Theory Methodology A philosophical perspective From Lakatos to empirical philosophy Patricia Northover of science 28 The Political Economy of the Small Roger Backhouse Firm 18 Subjectivity in Political Economy Edited by Charlie Dannreuther Essays on wanting and choosing 29 Hahn and Economic Methodology David P. Levine Edited by Thomas Boylan and Paschal 19 The Political Economy of Middle F. O’Gorman East Peace 30 Gender, Growth and Trade The impact of competing trade agendas The miracle economies of the postwar Edited by J.W. Wright, Jnr years David Kucera 20 The Active Consumer Novelty and surprise in consumer 31 Normative Political Economy choice Subjective freedom, the market and the Edited by Marina Bianchi state David Levine 21 Subjectivism and Economic Analysis 32 Economist with a Public Purpose Essays in memory of Ludwig Lachmann Essays in honour of John Kenneth Edited by Roger Koppl and Gary Galbraith Mongiovi Edited by Michael Keaney 22 Themes in Post-Keynesian 33 The Theory of Unemployment Economics Michel De Vroey Essays in honour of Geoff Harcourt, 34 The Fundamental Institutions of volume three Capitalism Edited by Peter Kriesler and Claudio Ernesto Screpanti Sardoni 35 Transcending Transaction 23 The Dynamics of Technological The search for self-generating markets Knowledge Alan Shipman Cristiano Antonelli 36 Power in Business and the State 24 The Political Economy of Diet, An historical analysis of its Health and Food Policy concentration Ben J. Fine Frank Bealey 25 The End of Finance 37 Editing Economics Capital market inflation, financial Essays in honour of Mark Perlman derivatives and pension fund capitalism Hank Lim, Ungsuh K. Park and Geoff Jan Toporowski Harcourt 38 Money, Macroeconomics and 42 Issues in Positive Political Economy Keynes S. Mansoob Murshed Essays in honour of Victoria Chick, 43 The Enigma of Globalisation volume one A journey to a new stage of capitalism Philip Arestis, Meghnad Desai and Robert Went Sheila Dow 44 The Market 39 Methodology, Microeconomics and Equilibrium, stability, mythology Keynes S.N. Afriat Essays in honour of Victoria Chick, volume two 45 The Political Economy of Rule Philip Arestis, Meghnad Desai and Evasion and Policy Reform Sheila Dow Jim Leitzel 40 Market Drive and Governance 46 Unpaid Work and the Economy Reexamining the rules for economic Edited by Antonella Picchio and commercial contest 47 Distributional Justice Ralf Boscheck Theory and measurement Hilde Bojer 41 The Value of Marx Political economy for contemporary 48 Cognitive Developments in capitalism Economics Alfredo Saad-Filho Edited by Salvatore Rizzello Cognitive Developments in Economics Edited by Salvatore Rizzello First published 2003 by Routledge 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 Routledge is an imprint of the Taylor & Francis Group This edition published in the Taylor & Francis e-Library, 2004. © 2003 editorial matter and selection, Salvatore Rizzello; individual chapters, the contributors All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Cognitive developments in economics / [edited by] Salvatore Rizzello. p. cm – (Routledge frontiers of political economy ; 48) Includes bibliographical references and index. 1. Economics–Methodology. 2. Institutional economics. 3. Cognitive science. I. Rizzello, Salvatore, 1963– II. Series. HB131.C64 2003 330'.01–dc21 2003043149 ISBN 0-203-57990-9 Master e-book ISBN ISBN 0-203-33950-9 (Adobe eReader Format) ISBN 0-415-30620-5 (Print Edition) Contents List of figures ix List of tables x List of contributors xi Acknowledgements xii Introduction: towards a cognitive evolutionary economics 1 SALVATORE RIZZELLO 1 Discrepancies: competing theories and ideologies as cognitive traps: the scientific discovery as puzzle-solving 20 MASSIMO EGIDI 2 Cognitive science meets evolutionary theory: what implications does evolutionary psychology have for economic theorising? 53 JACK J. VROMEN 3 Towards a cognitive experimental economics 82 MARCO NOVARESE 4 Accounting for social knowledge in economic analysis: the relevance of Adam Smith’s framework 107 PIER LUIGI PORTA AND ROBERTO SCAZZIERI 5 The making of a behavioural economist: Herbert A. Simon and the early evolution of bounded rationality 133 MIE AUGIER 6 The rhetorical dimensions of bounded rationality: Herbert A. Simon and organizational economics 158 NICOLAI J. FOSS viii Contents 7 Cognition, entrepreneurial conceptions and the theory of the firm 177 ULRICH WITT 8 Knowledge, understanding and the epistemology of innovative firms 193 J. STANLEY METCALFE 9 Managing exploitation and exploration 218 BART NOOTEBOOM 10 The epistemic foundations of social organizations: a game theoretical approach 243 CHRISTIAN SCHMIDT 11 Interactive learning and technological knowledge: the localised character of innovation processes 268 CRISTIANO ANTONELLI, JEAN-LUC GAFFARD AND MICHEL QUÉRÉ 12 Cognitive economies and the ‘nature of the district’ 281 MARGHERITA TURVANI 13 Learning in economics: some Austrian insights 302 PIERRE GARROUSTE 14 Beliefs, knowledge and equilibrium: a different perspective on Hayek 316 RICHARD ARENA 15 Guesswork and knowledge in evolutionary economics: Veblen revisited 338 FRANCESCA LIDIA VIANO 16 Problem complexity and problem representation: some implications for the theory of economic institutions 371 LUIGI MARENGO Index 389 Figures 1.1 The comparative efficiency of two strategies that solve the same problem 35 1.2 Rubik cube: a sub-problem 36 1.3 ‘Target the Two’: landscape of the efficiency of strategies 39 1.4 ‘Target the Two’: routinized behaviours 40 1.5 ‘Target the Two’: single-player routinization 41 1.6 Minirubik 43 1.7 Minirubik: the exchanging of tiles 43 1.8 Minirubik: example of a condition–action instruction 43 1.9 Minirubik: example of a starting configuration and the goal 44 1.10 Minirubik: an array of elementary instructions 45 1.11 Minirubik: ‘First A’ representation 46 1.12 Minirubik: initial position which is suboptimally played with the ‘First A’ strategy 46 3.1 The game played by one of the teams in the experiment ‘sum 10’ 100 3.2 The game played by another team in the experiment ‘sum 10’ 101 9.1 Cycle of exploitation and exploration 226 9.2 Cycle of