Bounded Rationality and Heuristics in Humans and in Artificial Cognitive Systems

In this paper I will present an analysis of the impact that the notion of “bounded rationality”, introduced by Herbert Simon in his book “Administrative Behavior”, produced in the field of Artificial Intelligence (AI). In particular, by focusing on the field of Automated Decision Making (ADM), I will show how the introduction of the cognitive dimension into the study of choice of a rational (natural) agent, indirectly determined - in the AI field - the development of a line of research aiming at the realisation of artificial systems whose decisions are based on the adoption of powerful shortcut strategies (known as heuristics) based on “satisficing” - i.e. non optimal - solutions to problem solving. I will show how the “heuristic approach” to problem solving allowed, in AI, to face problems of combinatorial complexity in real-life situations and still represents an important strategy for the design and implementation of intelligent systems

Social enterprise as a socially rational business

What is the goal of social enterprise policy? Is it the creation of a ‘not-for-profit’ or ‘more-than-profit’ business movement? In institutional policy circles, arguments are shaped by the desire to protect assets for the community, while entrepreneurial discourses favour a mixture of investment sources, surplus sharing and inclusive systems of governance. This article uses data from a critical ethnography to offer a third perspective. Human behaviour is a product of, and support system for, our socio-sexual choices. A grounded theory of social and economic capital is developed that integrates sexuality into organisation development. This constructs business organisations as complex centres of community-building replete with economic and social goals. By viewing corporate governance from this perspective social enterprise is reconceived as a business movement guided by social rationality with the long-term goal of distributing social and economic capital across stakeholder groups to satisfy individual and collective needs.</p

Practice-oriented controversies and borrowed epistemic credibility in current evolutionary biology: phylogeography as a case study

Although there is increasing recognition that theory and practice in science are intimately intertwined, philosophy of science perspectives on scientific controversies have been historically focused on theory rather than practice. As a step in the construction of frameworks for understanding controversies linked to scientific practices, here we introduce the notion of borrowed epistemic credibility (BEC), to describe the situation in which scientists, in order to garner support for their own stances, exploit similarities between tenets in their own field and accepted statements or positions properly developed within other areas of expertise. We illustrate the scope of application of our proposal with the analysis of a heavily methods-grounded, recent controversy in phylogeography, a biological subdiscipline concerned with the study of the historical causes of biogeographical variation through population genetics- and phylogenetics-based computer analyses of diversity in DNA sequences, both within species and between closely related taxa. Toward this end, we briefly summarize the arguments proposed by selected authors representing each side of the controversy: the ‘nested clade analysis’ school versus the ‘statistical phylogeography’ orientation. We claim that whereas both phylogeographic ‘research styles’ borrow epistemic credibility from sources such as formal logic, the familiarity of results from other scientific areas, the authority of prominent scientists, or the presumed superiority of quantitative vs. verbal reasoning, ‘theory’ plays essentially no role as a foundation of the controversy. Besides underscoring the importance of strictly methodological and other non-theoretical aspects of controversies in current evolutionary biology, our analysis suggests a perspective with potential usefulness for the re-examination of more general philosophy of biology issues, such as the nature of historical inference, rationality, justification, and objectivity

Less Rationality, More Efficiency: a Laboratory Experiment on "Lemon" Markets.

We have experimentally tested a theory of bounded rational behavior in a "lemon market". It provides an explanation for the observation that real world players successfully conclude transactions when perfect rationality predicts a market collapse. We analyzed two different market designs : complete and partial market collapse. Our empirical observations deviate substantially from these theoretical predictions. In both markets, the participants traded more than theoretically predicted. Thus, the actual outcome is closer to efficiency than the theoretical prediction. Even after 20 repetitions of the first market constellation, the number of transactions did not drop to zero. Our bounded rationality approach to explain these observations starts with the insight that perfect rationality would require the players to perform an infinite number of iterative reasoning steps. Bounded rational players, however, carry out only a limited number of such iterations. We have determined the iteration type of the players independently from their market behavior. A significant correlation exists between iteration types and observed price offers. --guessing games,beauty contests,market failure,adverse selection,lemon problem,regulatory failure,paternalistic regulation

Rationalizing Boundedly Rational Choice

A Rational Shortlist Method (RSM) translates into economic language some sequential choice heuristics studied in psychology. We show that the use of this boundedly rational procedure can be detected from observed choice data through tests that are very similar to those used to detect `rational' choice (such as Samuelson's WARP). Yet, RSMs are compatible with some highly `irrational' patterns of choice observed in experiments, such as pairwise cycles. We also provide partial results on a generalization of RSMs.rationalizability of choice, bounded rationality, intransitive choice, incomplete preferences, menu dependence

Суперпозиции свободных производных Фокса

Fox derivations are an effective tool for studying free groups and their group rings. Let Fr be a free group of nite rank r with basis {f1;...; fr}. For every i, the partial Fox derivations ∂/∂fi and ∂/∂f-1i are dened on the group ring Z[Fr]. For k > 2, their superpositions Dfi = ∂/∂fik ○...○ ∂/∂fi∈1; ∈ = (∈1;...;∈k) ∈ {±1}k; are not Fox derivations. In this paper, we study the properties of superpositions Dfi∈. It is shown that the restrictions of such superpositions to the commutant Fr0 are Fox derivations. As an application of the obtained results, it is established that for any rational subset R of Fr0 and any i there are parameters k and ∈ such that R is annihilated by Dfi∈

A Matter of Interpretation: Bargaining over Ambiguous Contracts

We present a formal treatment of contracting in the face of ambiguity. The central idea is that boundedly rational individuals will not always interpret the same situation in the same way. More specifically, even with well defined contracts, the precise actions to be taken by each party to the contract might be disputable. Taking this potential for dispute into account, we analyze the effects of ambiguity on contracting. We find that risk averse agents will engage in ambiguous contracts for risk sharing reasons. We provide an application where ambiguity motivates the use of a liquidated damages contract.ambiguity, bounded rationality, expected uncertain utility, incomplete contracts, liquidated damages.

You Better Play 7: Mutual versus Common Knowledge of Advice in a Weak-link Experiment

This paper presents the results of an experiment on mutual versus common knowl- edge of advice in a two-player weak-link game with random matching. Our experimen- tal subjects play in pairs for thirteen rounds. After a brief learning phase common to all treatments, we vary the knowledge levels associated with external advice given in the form of a suggestion to pick the strategy supporting the payoff-dominant equilib- rium. In the mutual knowledge of level 1 treatment, the suggestion appears on every subject's monitor at the beginning of every round, with no common knowledge that everybody sees the same suggestion. In the mutual knowledge of level 2 treatment, the same suggestion appears on each subject's monitor, accompanied by the request to "send" the suggestion to the partner in the round, followed by a notification that the message has been read. Finally, in the common knowledge treatment, the suggestion is read aloud by the experimenter at the end of the learning phase. Our results are somewhat surprising and can be summarized as follows: in all our treatments both the choice of the efficiency-inducing action and the percentage of efficient equilibrium play are higher with respect to the control treatment, revealing that even a condition as weak as mutual knowledge of level 1 is sufficient to significantly increase the salience of the efficient equilibrium with respect to the absence of advice. Furthermore, and contrary to our hypothesis, mutual knowledge of level 2 (as the one occurring in our "message" treatment) induces successful coordination more frequently than common knowledge.Coordination games; experimental philosophy; epistemic attitudes, weak-link game; conventions

You Better Play 7: Mutual versus Common Knowledge of Advice in a Weak-link Experiment

This paper presents the results of an experiment on mutual versus common knowl- edge of advice in a two-player weak-link game with random matching. Our experimen- tal subjects play in pairs for thirteen rounds. After a brief learning phase common to all treatments, we vary the knowledge levels associated with external advice given in the form of a suggestion to pick the strategy supporting the payo-dominant equilib- rium. In the mutual knowledge of level 1 treatment, the suggestion appears on every subject's monitor at the beginning of every round, with no common knowledge that everybody sees the same suggestion. In the mutual knowledge of level 2 treatment, the same suggestion appears on each subject's monitor, accompanied by the request to "send" the suggestion to the partner in the round, followed by a notication that the message has been read. Finally, in the common knowledge treatment, the suggestion is read aloud by the experimenter at the end of the learning phase. Our results are somewhat surprising and can be summarized as follows: in all our treatments both the choice of the efficiency-inducing action and the percentage of e cient equilibrium play are higher with respect to the control treatment, revealing that even a condition as weak as mutual knowledge of level 1 is sufficient to signicantly increase the salience of the e cient equilibrium with respect to the absence of advice. Furthermore, and contrary to our hypothesis, mutual knowledge of level 2 (as the one occurring in our "message" treatment) induces successful coordination more frequently than common knowledge.Coordination games; experimental philosophy; epistemic attitudes, weak-link game; conventions