Evolutionary Microeconomics and the Theory of Expectations

This paper sketches a framework for the analysis of expectations in an evolutionary microeconomics. The core proposition is that expectations form a network structure, and that the geometry of that network will provide a suitable guide as to the dynamical behaviour of that network. It is a development towards a theory of the computational processes that construct the data set of expectations. The role of probability theory is examined in this context. Two key issues will be explored: (1) on the nature and stability of expectations when they form as a complex network; and (2), the way in which this may be modelled within a multi-agent simulation platform. It is argued that multi-agent simulation (a-life) techniques provide an expedient analytical environment to study the dynamic nature of mass expectations, as generated or produced objects, in a way that bridges micro and macroeconomics.

Uncertainty and Expectations in Shackle's Theory of Capital and Interest

This paper is focused on the macroeconomic aspects of Shackle’s theory of decisions under uncertainty and, more particularly, of his theory of capital and interest. The paper starts by arguing that Shackle’s general approach stems from the identification of, and conflict between, two Paradigms: the Economics of Uncertainty and Expectations (EUE), which was developed in the “years of high theory”, and General Equilibrium Theory (GET). The paper brings out some flaws in Shackle’s view of this conflict and highlights the insights and advances by which Shackle identifies and strengthens the major features of the EUE Paradigm. Amongst these features is the focus on historical time, on expectations and their failures, on money as a store of value, on ex ante and ex post magnitudes, on macroeconomic equilibrium and disequilibrium, on economic fluctuations. The paper argues that, while clarifying or criticizing in his brilliant manner many or some parts of the Keynesian theory of interest or of the Austrian theory of capital, Shackle fails to highlight the difference between the theory of interest as such (the old Austrian theory) and the theory of the money rate of interest (the Keynesian theory) as well as the difference between the theory of capital in the context of logical time (the old Austrian approach) and the theory of capital in the context of historical time (Hayek’s and Shackle’s own approach)Shackle, uncertainty, expectations, capital, interest

Shackle on time, uncertainty and process

This paper is intended both as a contribution to the conceptual work on process in economic thought and as an attempt to connect a non-institutionalist, non-evolutionary thinker to it. The paper has two principal objectives: (i) to delineate a broad, philosophically grounded conception of what an economic process theory (EPT) is; and (ii) to locate the contributions of George Shackle within this broad conception of EPT. In pursuing these two objectives, I hope to draw out the originality and significance of Shackle’s economics with a particular emphasis on what he adds to process conceptions developed within other heterodox traditions such as institutional and evolutionary economics. I will also highlight some of the perceived limitations of Shackle’s approach and link them to the limitations of process philosophy

Relating Knowledge and Coordinated Action: The Knowledge of Preconditions Principle

The Knowledge of Preconditions principle (KoP) is proposed as a widely applicable connection between knowledge and action in multi-agent systems. Roughly speaking, it asserts that if some condition is a necessary condition for performing a given action A, then knowing that this condition holds is also a necessary condition for performing A. Since the specifications of tasks often involve necessary conditions for actions, the KoP principle shows that such specifications induce knowledge preconditions for the actions. Distributed protocols or multi-agent plans that satisfy the specifications must ensure that this knowledge be attained, and that it is detected by the agents as a condition for action. The knowledge of preconditions principle is formalised in the runs and systems framework, and is proven to hold in a wide class of settings. Well-known connections between knowledge and coordinated action are extended and shown to derive directly from the KoP principle: a "common knowledge of preconditions" principle is established showing that common knowledge is a necessary condition for performing simultaneous actions, and a "nested knowledge of preconditions" principle is proven, showing that coordinating actions to be performed in linear temporal order requires a corresponding form of nested knowledge.Comment: In Proceedings TARK 2015, arXiv:1606.0729

Institutions as Knowledge Capital: Ludwig M. Lachmann’s Interpretative Institutionalism

The paper revisits the socioeconomic theory of the Austrian School economist Ludwig M. Lachmann. By showing that the common claim that Lachmann’s idiosyncratic (read: eclectic and multidisciplinary) approach to economics entails nihilism is unfounded, it reaches the following conclusions. (1) Lachmann held a sophisticated institutional position to economics that anticipated developments in contemporary new institutional economics. (2) Lachmann’s sociological and economic reading of institutions offers insights for the problem of coordination. (3) Lachmann extends contemporary new institutional theory without simultaneously denying the policy approach of comparative institutional analysis

The Dynamics of Group Knowledge and Belief

5th International Workshop On Philosophy and Logic of Social Reality. 15-17 November 2019.Hokkaido University, Sapporo, Japa

Action Plans and Socio-Economic Evolutionary Change

An important challenge to evolutionary economics consists of how to tackle with the dramatic tension between purposeful human action and the ‘blindness’ of evolutionary processes. On the one hand, economic action, if rational, has to be planned (which implies purposeful ordering of the means used to achieve objectives). On the other hand, an evolutionary process involves both the emergence of novelties (both intended innovations and unintended consequences of actions) and properties that manifest at meso and macro levels. Some recent papers have insisted on these issues. However, few analytical tools are yet available to cope with both, the analysis of intended dynamic action and ‘blind’ evolution. In this paper we propose the so-called ‘action plan approach’, a theoretical framework which could be useful for this task. The development of tools that permit us to analyze how individuals construct their plans, the projective (conjectural) and interactive nature of action, and the learning processes involved in ‘planning and acting’, may help us identifying and understanding new sources of complexity of economic processes. The close relationship of the ‘action plan approach’ with other systemic conceptual approaches is also highlighted.connections, action plans; novelty; intentionality; evolutionary economic process