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CFP: Cosmos + Taxis

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The interdisciplinary journal Cosmos + Taxis is issuing a call for papers for its second conference on spontaneous orders, to be held at the Rochester Institute of Technology from May 8 to May 9, 2015.

Both days will feature morning and afternoon sessions and informal lunches and dinners. The theme of the conference is “Spontaneous Order in Economic and Political Thought from Smith to Hayek and Beyond.”

We are looking for papers that explore spontaneous orders or complexity theory in the history of political and/or economic thought, including but not limited to work on thinkers such as Adam Smith, Edmund Burke, Herbert Simon, Michael Polanyi, and, of course, Friedrich Hayek. More contemporary work that builds on these traditions is also welcome.

Papers that are selected for presentation will be considered for inclusion in Cosmos + Taxis, an open-source peer-reviewed journal.

Participants will be provided with lodging and meals while in Rochester, NY and may apply for additional travel assistance, depending on funding availability and need. The deadline for abstract submission is October 1, 2015.

The abstract must be an extended one of between 500 and 600 words, not including an optional list of up to 10 key literature references. The abstracts will be reviewed by a multidisciplinary panel. Due to the interactive format of the conference, we will select between 12 and 14 of the proposed papers for inclusion in the final program. Final versions of accepted papers are due April 1, 2015. All accepted papers are allotted 45 minutes of program time.

Extended abstracts and papers should be submitted by email as a Word document to David.Andersson@nottingham.edu.cn.

Bounded Rationality Updated

Special issue of Mind & Society. (H/T to Francesco Di Iorio)
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From April 8th to 10th 2013, the Herbert Simon Society held its first General Conference in New York. About fifty researchers from different countries and working in different areas attended the event. The conference focused on three topics which were identified as particularly relevant in the development of Simonian thought: duality of mind, creativity and alternative theories to rational expectations. A first Herbert Simon Honorary Lecture by Gerd Gigerenzer opened the conference. Gerg Gigerenzer was later elected as Chairman of the Herbert Simon Society. Joseph Stiglitz closed the conference with the second Herbert Simon Honorary Lecture.

The Herbert A. Simon Society brings together economists, social and cognitive scientists engaged in critical issues such as bounded rationality, problem solving, simulation of human thought and creativity. In particular, it gathers some of the most important economists who try to reformulate economic theory by starting from some of the non-neoclassical micro-foundations that have been developed in recent years. The Simon Society shares many interests with other Associations working on Behavioural Economics, Economic and Cognitive Social Psychology and Artificial Intelligence.

This special issue collects some of the most interesting papers presented at the conference. Katherine Simon Frank, Herbert Simon’s daughter, made some welcoming remarks and talked about her father. In describing his way of being a parent, Kathie highlights some important aspects of Herbert Simon’s intellectual nature, such as his openness, his willingness to understand the world and debate with no preconceptions. This is also one of the goals of the Herbert Simon Society.

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Daniel Kahneman

Here are some high profile thinkers assessing the impact of DK especially in light of his accessible Thinking, Fast and Slow. Below is a encyclopedia entry I did on DK.

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Daniel Kahneman (b. 1934) is a social psychologist who, along with experimental economist Vernon Smith, shared the Nobel prize in economics for 2002. Though the prize was conferred upon Kahneman, it was in in effect recognition of the seminal work dubbed “prospect theory” that Kahneman formulated in collaboration with the late Amos Tvesky. Independently and jointly they were interested in studying the cognitive biases (and cognitive illusions) of intuitive thinking; of how minds actually operate in a social world shot through with limitations, complexity and contingency. Their research can be understood as a finer-grained and more technical explication of Simon’s “bounded rationality” pursuing three different, though not unrelated, lines of inquiry – heuristics, prospect theory and framing effects – that all came to be distilled in Kahneman (2011).

The “framing effect” connotes the idea that options are described in terms of gains (positive frame) rather than losses (negative frame) and under study, elicits systematically different choices. Prospect theory concerns the psychophysics of wealth utility: that is, the perceived tradeoffs between potential outcomes and the probability of some outcome occurring. Kahneman and Tversky reworked Bernoulli’s long established orthodoxy of wealth utility that supposedly explained loss aversion through quantifiable states of wealth. Instead, they took the view that by asking subjective questions rather than propositional (or abstract) questions regarding terms of loss and gain, they presented a richer explanation for loss aversion. They found that that though agents like winning and dislike losing, they in effect are orientated to dislike losing more.

Kahneman and Tversky (1979) initially articulated decisions under risk (as opposed to decisions under uncertainty) involving at most two non-zero outcomes. Later as cumulative prospect theory (1992) they accommodated decisions under uncertainty and risky conditions that employs cumulative, rather than separable decision weights with any number of outcomes.

Out of prospect theory grew Kahneman’s “two minds” thesis, summarized for a popular audience in his book Thinking, Fast and Slow. The title of the book connotes two fictional systemic ideal types or characters: fast thinking connotes the “on the fly” or “online” or automatic intuitive operation of the human perceptual and memory apparatus; slow thinking by contrast is “conscious,” deliberate, effortful, conceptual, analytical and propositional in character. Four things should be noted. The positing of these two systems should not lead one to any of the following inferences:

(a) that there is indeed a sharp duality and that ne’er the twain shall meet;
(b) that these two “systems” have definitive brain structure instantiations;
(c) that fast thinking is intrinsically irrational;
(d) that slow thinking is intrinsically rational.

In support of his thesis Kahneman’s presents a raft of empirically based puzzles, illusions and paradoxes illustrating our innate capacity for deluding ourselves and perhaps more importantly just about how little we know. Kahneman illustrates how heuristics or rules of thumb deployed to solve statistical problems can quite easily result in biased estimates and predictions. Respondents, when confronted with a problem to which they are unlikely to know the correct answer to, tend to allow their ruminations to be influenced by objectively irrelevant frames. Other heuristic tests showed that even if respondents receive all the information needed, it is not used correctly.

This said, it should be understood that Kahneman is not suggesting that agents are necessarily and irredeemably irrational – what he’s proposing is merely that one is alert to the supposedly infallible deliverances of intuition. Kahneman’s and Tversky’s work illustrated that neither the lay individual nor indeed even the expert in any knowledge community, are immune from systematic error. Given the vast scope of the “expertise industry” be within an academic or in a public life setting, Kahneman is viewed as highly controversial, not least in his own field of psychology where he has called for a more rigorous validation of priming effect studies.

See also: Anchoring; bounded rationality; ecological rationality; errors and biases; heuristics

Further Reading:

Kahneman, D., & Tversky, A. 1973. On the psychology of prediction. Psychological Review, 80, 237-25l.
Kahneman, D., & Tversky, A. 1974. Judgment Under Uncertainty: Heuristics and Biases. Science, New Series, Vol. 185, No. 4157: 1124-1131.
Kahneman, D., & Tversky, A. 1979. Prospect theory: An analysis of decisions under risk. Econometrica, Vol. 47, No. 2: 263-291.
Kahneman, D., & Tversky, A. 1992. Advances in prospect theory: Cumulative representation of uncertainty. Journal of Risk and Uncertainty 5 (4): 297–323.
Kahneman, D. 2011. Thinking, Fast and Slow. Toronto: Random House.

Constructivist and Ecological Rationality in Economics

All those interested in extended mind/externalist/situated type thought should be aware of the field of Behavioral Economics (BE) in general and the work of Vernon Smith in particular. BE is a body of literature that was ploughing this trough some twenty years before the hypothesis of extended cognition took root in cognitive science. It is interesting to note that the Clark and Chalmers thesis took some inspiration from Herbert Simon (Clark & Chalmers, 1998). Simon writes:

Human beings, viewed as behaving systems, are quite simple. The apparent complexity of our behavior over time is largely a reflection of the complexity of the environment in which we find ourselves . . . [I] would like to view this information-packed memory less as part of the organism than as part of the environment to which it adapts . . . (Simon, 1996, 53, cf.8, 62, 99, 110).

But what is remarkable about this is that Simon in turn credits and endorses Hayek for this view:

No-one has characterized market mechanisms better than Friedrich von Hayek . . . [His] defense did not rest primarily upon the supposed optimum attained by them but rather upon the limits of the inner environment – the computational limits of human beings (Simon, 1996, 34).

What Simon has grasped is the corollary to Hayek’s spontaneous order externalism – “cognitive closure” (or in Simon’s terminology “bounded rationality” was a key presupposition to all Hayek’s work and set out in its most technical form in Hayek (1952/1976). Cognitive closure is the idea that the human mind is constitutionally delimited – a condition that can be ameliorated if the social and artifactual world functions as a kind of distributed extra-neural knowledge store.

Through the work of Vernon Smith (the provenance going back to his classical namesake, Adam), ecological or situated/bounded rationality has received its most recent and finest articulation. Unlike some Nobel Laureates (no names) Vernon is not a prima donna. He is exceedingly approachable, very kind, generous, modest and open-minded. I was lucky enough to meet  Vernon in Tucson and he put me at ease very quickly as did his charming wife. Recently, Vernon gave me an inscribed copy of his Rationality in Economics: Constructivist and Ecological Forms along with his autobiography Discovery – A Memoir, the former deeply informing my work; the latter interest taking wing from my talking to him about his Kansas youth.

Nobel Lecture

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Herbert Simon

Since I missed marking the birth of Simon on the 15th, here’s a belated posting of an obituary by his student Edward A. Feigenbaum. (I’m pleased to report that my co-edited project with Roger Frantz commemorating the centenary of HS’s birth is coming together very nicely. HS’s daughter has been incredibly responsive towards the project).

Herbert A . Simon, winner of the 1978 Nobel Prize in Economics, died on 9 February at the age of 84. He was Richard King Mellon Professor of Computer Science and Psychology at Carnegie Mellon University. In an era when universities assiduously preserve the names of their new buildings for generous donors, the new Computer Science Building at Carnegie Mellon University is instead named for Simon and another renowned computer scientist, Allen Newell.

The hallmark of Simon’s remarkable career is the extent of his cross-disciplinary contributions: from economic theory to psychology to behavioral science to computer science. Before his Nobel Prize, Simon had already won the A. M. Turing Award, the top accolade for computer science, prompting computer scientists to refer to him as “our Nobel Prize winner.” But psychologists also awarded him their top honor, the Distinguished Scientific Contribution Award, and they too claimed him as their own.

As his graduate student, in awe of his enormous knowledge and the range of his contributions, I once asked him to explain his mastery of so many fields. His unforget-table answer was, “I am a monomaniac. What I am a monomaniac about is decision-making.” Studies and models of decision-making are the themes that unify most of Simon’s contributions.

He challenged the assumptions of mid- 20th century economic theory, the so-called Rational Economic Man model. This model assumed the omniscience of human decision-making: that humans recognize all of their possible choices and the consequences of selecting each. Simon, the empiricist, observed that Rational Economic Man does not exist. The cognitive ability of people to recognize alternatives and calculate optima is in fact quite limited. He argued that economics could not be built upon a foundation of assumptions concerning human behavior that were patently false.

As a substitute, he introduced assumptions of bounded rationality and the concept of “Satisficing” Man, who cannot maximize – or minimize because the computational demands of doing so are beyond his capability. Satisficing man makes choices that are satisfactory-good enough, rather than the best. In the early 1950s, Simon introduced his theory with two classic papers in which he argued that objects (real or symbolic) in the environment of the decision-maker influence choice as much as the intrinsic information-processing capabilities of the decision-maker. In his book The Sciences of theArtificial (1), with his usual expository skill, he made this idea easy to grasp. His metaphor was the ant on the beach: The ant makes her way from a starting point to a food source along an intricate path. But the path appears to be complex only because of the patterns of the intervening grains of sand, not because of any complex information-processing by the ant.

Collaborating with James March, Simon applied the search model of problem-solving to the study of how organizations make decisions and how they innovate. Their book, Organizations (2), is the foundation of modern organization theory. March, Richard Cyert, and others extended Simon’s theory to microeconomic phenomena in the influential book, A Behavioral Theory of the Firm (3).

Simon, the theorist, sought to give these abstractions a concrete expression from which precise predictions of human problem-solving behavior could be made. Simon tried using mathematics but found its lan-guage was not rich enough to express the complexity of the problem-solving processes he was attempting to model. With Allen Newell in 1955, he discovered the right economics language: the language of the digital computer. Newell, Simon, and J. C. Shaw of RAND invented a powerful programming language for describing complex symbol processing. They used their new language to model problem-solving processes such as proving theorems in logic. This marked the start of the field of artificial intelligence and Si-mon considered this contribution to be his finest. Many computer simulation programs of human cognition followed. Newell and Simon’s 1972 book, Human Problem Solving (4), is perhaps .- the most important book on the scientific study of human thinking in the 20th century.

For the last 25 years of his life, Simon continued to experiment and build computer models of cognition. He designed models of human expertise, scientific discov-ery (he modeled how certain historically great discoveries of science were actually made), and human memory. He worked for decades on models of the processes through which symbols are learned, recognized, retrieved, and forgotten.

If one were to read a single book that would encompass the essential Simon, I would suggest the slim volume The Sciences of the Artificial (1), written for a broad scientific audience. In an elegant and lucid way, Simon explains the principles of modeling complex systems, particularly the human in formation-processing system that we call the mind. There is no better epilogue for Herbert Simon than that imparted by one of his Carnegie Mellon University colleagues: As Herb Simon struggled to recover from complications of surgery a few days before his death, this author of nearly a thousand papers and 27 books finished a manuscript he was writing and gave instructions to his daughter about its publication.

References

1. H.A. Simon, The Sciences of the Artificial  [The Karl Taylor Compton Lectures] (MIT Press, Cambridge, MA,1969).

2. J. G. March, H. A. Simon, Organizations (Wiley, New York, 1958).

3. R.M. Cyert, J. G. March, A Behavioral Theory of the Firm (Prentice-Hall, Englewood Cliffs, NJ, 1963).

4. A. Newell, H. A. Simon, Human Problem Solving (Prentice-Hall, Englewood Cliffs, N J, 1972).

From: SCIENCE VOL 291 16 MARCH 2001