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.

Toward behavioural innovation economics – Heuristics and biases in choice under novelty

A framework for ‘behavioural innovation economics’ is proposed here as a synthesis of behavioural economics and innovation economics in the specific context of choice under novelty. We seek to apply the heuristics and biases framework of behavioural economics to the study of the innovation process in order to map and analyze systematic choice failures in the innovation process. We elaborate the distinction between choice under uncertainty and choice under novelty, as well as drawing out the ‘efficient innovation hypothesis’ implicit in most behavioural models of innovation. The subject domain of a research program for behavioural innovation economics is then briefly outlined in terms of a catalogue of characteristic ways in which choice under novelty renders innovation processes subject to failure.

Introduction: Creative industries and innovation policy

This special issue of Innovation : Management, Policy & Practice (also released as a book: ISBN 978-1-921348-31-0) will explore some empirical and analytic connections between creative industries and innovation policy. Seven papers are presented. The first four are empirical, providing analysis of large and/or detailed data sets on creative industries businesses and occupations to discern their contribution to innovation. The next three papers focus on comparative and historical policy analysis, connecting creative industries policy (broadly considered, including media, arts and cultural policy) and innovation policy. To introduce this special issue I want to review the arguments connecting the statistical, conceptual and policy neologism of ‘creative industries’ to: (1) the elements of a national innovation system; and (2) to innovation policy. In approaching this connection, two overarching issues arise

An entrepreneurial model of economic and environmental co-evolution

A basic tenet of ecological economics is that economic growth and development are ultimately constrained by environmental carrying capacities. It is from this basis that notions of a sustainable economy and of sustainable economic development emerge to undergird the ‘standard model’ of ecological economics. However, the belief in ‘hard’ environmental constraints may be obscuring the important role of the entrepreneur in the coevolution of economic and environmental relations, and hence limiting or distorting the analytic focus of ecological economics and the range of policy options that are considered for sustainable economic development. This paper outlines a co-evolutionary model of the dynamics of economic and ecological systems as connected by entrepreneurial behaviour. We then discuss some of the key analytic and policy implications.

Why evolutionary realism underpins evolutionary economic analysis and theory: A reply to Runde's critique

This paper offers a reply to Jochen Runde's critical appraisal of the ontological framework underpinning Dopfer and Potts's (2008) General Theory of Economic Evolution. We argue that Runde's comprehensive critique contains several of what we perceive to be misunderstandings in relation to the key concepts of ‘generic' and ‘meso' that we seek here to unpack and redres

Cultural Science

This book is available as open access through the Bloomsbury Open Access programme and is available on www.bloomsburycollections.com. Cultural Science introduces a new way of thinking about culture. Adopting an evolutionary and systems approach, the authors argue that culture is the population-wide source of newness and innovation; it faces the future, not the past. Its chief characteristic is the formation of groups or 'demes' (organised and productive subpopulation; 'demos'). Demes are the means for creating, distributing and growing knowledge. However, such groups are competitive and knowledge-systems are adversarial. Starting from a rereading of Darwinian evolutionary theory, the book utilises multidisciplinary resources: Raymond Williams's 'culture is ordinary' approach; evolutionary science (e.g. Mark Pagel and Herbert Gintis); semiotics (Yuri Lotman); and economic theory (from Schumpeter to McCloskey). Successive chapters argue that: -Culture and knowledge need to be understood from an externalist ('linked brains') perspective, rather than through the lens of individual behaviour; -Demes are created by culture, especially storytelling, which in turn constitutes both politics and economics; -The clash of systems - including demes - is productive of newness, meaningfulness and successful reproduction of culture; -Contemporary urban culture and citizenship can best be explained by investigating how culture is used, and how newness and innovation emerge from unstable and contested boundaries between different meaning systems; -The evolution of culture is a process of technologically enabled 'demic concentration' of knowledge, across overlapping meaning-systems or semiospheres; a process where the number of demes accessible to any individual has increased at an accelerating rate, resulting in new problems of scale and coordination for cultural science to address. The book argues for interdisciplinary 'consilience', linking evolutionary and complexity theory in the natural sciences, economics and anthropology in the social sciences, and cultural, communication and media studies in the humanities and creative arts. It describes what is needed for a new 'modern synthesis' for the cultural sciences. It combines analytical and historical methods, to provide a framework for a general reconceptualisation of the theory of culture – one that is focused not on its political or customary aspects but rather its evolutionary significance as a generator of newness and innovation

Bounded rationality and decomposability: The basis for integrating cognitive and evolutionary economics

This paper explores the interconnections between two of Herbert Simon's key concepts, bounded rationality and decomposability, and show how this unity provides the starting point for merging cognitively focused approaches to behavioral economics with evolutionary/institutional economics into a coherent single framework. It does this by showing how the authors' ways of looking at the world were influenced by Simon's thinking: in the case of Earl, this led initially to a check-list view of choice that helped to make sense of the role of non-price factors in international trade and the de-industrialization problem in the UK in the 1970s, while the notion that resilient systems tend to be structurally decomposable helped make sense of why sharp rises in prices of 'basic' products can produce crises. Potts came to see the economic system as a multi-level system of partially decomposable systems that agents developed as a means of coping with bounded rationality. The paper ends by reflecting on potential for instability as the world economy becomes increasingly globalized and its web of connections potentially more intricate

Micro-meso-macro

Abstract.: Building on the ontology of evolutionary realism recently proposed by Dopfer and Potts (forthcoming), we develop an analytical framework for evolutionary economics with a micro-meso-macro architecture. The motive for reconception is to make clear the highly complex and emergent nature of existence and change in economic evolution. For us, the central insight is that an economic system is a population of rules, a structure of rules, and a process of rules. The economic system is a rule-system contained in what we call the meso. From the evolutionary perspective, one cannot directly sum micro into macro. Instead, we conceive of an economic system as a set of meso units, where each meso consists of a rule and its population of actualizations. The proper analytical structure of evolutionary economics is in terms of micro-meso-macro. Micro refers to the individual carriers of rules and the systems they organize, and macro consists of the population structure of systems of meso. Micro structure is between the elements of the meso, and macro structure is between meso elements. The upshot is an ontologically coherent framework for analysis of economic evolution as change in the meso domain - in the form of what we call a meso trajectory - and a way of understanding the micro-processes and macro-consequences involved. We believe that the micro-meso-macro analytical framework can greatly enhance the focus, clarity, and, ultimately, power, of evolutionary economic theor