Mechanisms for Decisions about the Future

Evolutionary and psychological perspectives on decision making remain largely separate endeavors. The bounded rationality approach integrates these two perspectives by focusing on simple, plausible mechanisms of decision making and the cognitive capacities needed to implement these mechanisms. Decisions about the future provide a class of decisions that lend themselves to a bounded rationality approach. Though many different mechanisms may exist for making decisions about the future, only a subset of these mechanisms actually require a representation of the future. The bounded rationality approach helps focus on the cognitive capacities and decision mechanisms that are necessary for a full understanding of decision making about the future. Volume bibliography attached (below) as an additional file

The social lives of products: Analyzing product demography for management theory and practice

Despite the centrality of products in many strategic and managerial theoretical frameworks, little is known systematically about how and why specific products come and go from markets. We argue that narrowing this gap will likely enhance management theory, and we propose that research on product demography—the social lives of products—is a promising way to proceed. For organizing various theoretical ideas used in prior studies, we offer a classification framework. It defines four broad theoretical perspectives on product demography: market rationality, firm rationality, organizational bounded rationality, and institutional rationality. We also outline an approach to product demography that studies empirically the rates of product launch, growth, and withdrawal using stochastic models and data on all products ever appearing in bounded industrial domains. Finally, we discuss the challenges presented by such a fragmented approach to research on product demography and propose a generic research program intended to avoid stagnation

Cognitively-inspired Agent-based Service Composition for Mobile & Pervasive Computing

Automatic service composition in mobile and pervasive computing faces many challenges due to the complex and highly dynamic nature of the environment. Common approaches consider service composition as a decision problem whose solution is usually addressed from optimization perspectives which are not feasible in practice due to the intractability of the problem, limited computational resources of smart devices, service host's mobility, and time constraints to tailor composition plans. Thus, our main contribution is the development of a cognitively-inspired agent-based service composition model focused on bounded rationality rather than optimality, which allows the system to compensate for limited resources by selectively filtering out continuous streams of data. Our approach exhibits features such as distributedness, modularity, emergent global functionality, and robustness, which endow it with capabilities to perform decentralized service composition by orchestrating manifold service providers and conflicting goals from multiple users. The evaluation of our approach shows promising results when compared against state-of-the-art service composition models.Comment: This paper will appear on AIMS'19 (International Conference on Artificial Intelligence and Mobile Services) on June 2

Governance and Competence

Transaction cost economics faces serious problems concerning the way it deals, or fails to deal, with bounded rationality, the efficiency of outcomes, trust, innovation, learning and the nature of knowledge. The competence view yields an alternative perspective on the purpose and boundaries of the firm. However, the competence view cannot ignore issues of governance, and in spite of serious criticism, transaction cost economics yields useful concepts to deal with it. This article aims to contribute to the development of theory and empirical research that connects governance and competence perspectives

Rethinking Rationality

We seek to understand rational decision making and if it exists whether finite (bounded) agents may be able to achieve its principles. This aim has been a singular objective throughout much of human science and philosophy, with early discussions identified since antiquity. More recently, there has been a thriving debate based on differing perspectives on rationality, including adaptive heuristics, Bayesian theory, quantum theory, resource rationality, and probabilistic language of thought. Are these perspectives on rationality mutually exclusive? Are they all needed? Do they undermine an aim to have rational standards in decision situations like politics, medicine, legal proceedings, and others, where there is an expectation and need for decision making as close to “optimal” as possible? This special issue brings together representative contributions from the currently predominant views on rationality, with a view to evaluate progress on these and related questions

On Blockchain We Cooperate: An Evolutionary Game Perspective

Cooperation is fundamental for human prosperity. Blockchain, as a trust machine, is a cooperative institution in cyberspace that supports cooperation through distributed trust with consensus protocols. While studies in computer science focus on fault tolerance problems with consensus algorithms, economic research utilizes incentive designs to analyze agent behaviors. To achieve cooperation on blockchains, emerging interdisciplinary research introduces rationality and game-theoretical solution concepts to study the equilibrium outcomes of various consensus protocols. However, existing studies do not consider the possibility for agents to learn from historical observations. Therefore, we abstract a general consensus protocol as a dynamic game environment, apply a solution concept of bounded rationality to model agent behavior, and resolve the initial conditions for three different stable equilibria. In our game, agents imitatively learn the global history in an evolutionary process toward equilibria, for which we evaluate the outcomes from both computing and economic perspectives in terms of safety, liveness, validity, and social welfare. Our research contributes to the literature across disciplines, including distributed consensus in computer science, game theory in economics on blockchain consensus, evolutionary game theory at the intersection of biology and economics, bounded rationality at the interplay between psychology and economics, and cooperative AI with joint insights into computing and social science. Finally, we discuss that future protocol design can better achieve the most desired outcomes of our honest stable equilibria by increasing the reward-punishment ratio and lowering both the cost-punishment ratio and the pivotality rate

Barriers to industrial energy efficiency: a literature review

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Regulating Shadows: Financial Regulation and Responsibility Failure

In the modern financial architecture, financial services and products increasingly are provided outside of the traditional banking system—and thus without the need for bank intermediation between capital markets and the users of funds. Most corporate financing, for example, no longer is dependent on bank loans but raised through special-purpose entities, money-market mutual funds, securities lenders, hedge funds, and investment banks. This shift, referred to as “disintermediation” and described as creating a “shadow banking” system, is so radically transforming finance that regulatory scholars need to rethink their assumptions. Two of the fundamental market failures underlying shadow banking—information failure and agency failure—were also prevalent in the bank-intermediated financial system. By amplifying systemic risk, however, disintermediation greatly increases the importance of what scholars long have viewed as a third market-failure category: externalities. Viewing externalities as a distinct category of market failure is misleading, though: externalities are fundamentally consequences, not causes, of failures; and all market failures can result in externalities. Focusing on externalities also obscures who should be responsible for causing the externalities. This article argues that the third market-failure category should be reconceptualized as a “responsibility failure”: a firm’s ability to externalize a significant portion of the costs of taking a risky action. That not only would more precisely describe the market failure but also would help to illuminate that sometimes the government itself, not merely individual firms, should bear responsibility for causing externalities, and that exercising this responsibility may require the government to enact laws that require firms to internalize those costs