"The inductive-reasoning system I have described above consists of a multitude of “elements” in the form of belief-models or hypotheses that adapt to the aggregate environment they jointly create. Thus it qualifies as an adaptive complex system. After some initial learning time, the hypotheses or mental models in use are mutually co-adapted. Thus we can think of a consistent set of mental models as a set of hypotheses that work well with each other under some criterion—that have a high degree of mutual adaptedness. Sometimes there is a unique such set, it corresponds to a standard rational expectations equilibrium, and beliefs gravitate into it. More often there is a high, possibly very high, multiplicity of such sets. In this case we might expect inductive reasoning systems in the economy—whether in stock-market speculating, in negotiating, in poker games, in oligopoly pricing, in positioning products in the market—to cycle through or temporarily lock into psychological patterns that may be non-recurrent, path-dependent, and increasingly complicated. The possibilities are rich."
Quote Details
Added by wikiquote-import-bot
Unverified quote
0 likes
People from BelfastSystems scientistsGame theoristsStanford University facultyEconomists from Northern Ireland
Original Language: English
Available Languages (1)
Sources
p. 8
https://en.wikiquote.org/wiki/W._Brian_Arthur
Revision History
No revisions have been submitted for this quote.
Categories
W. Brian Arthur
17 quotes on TrueQuotesView all quotes by W. Brian Arthur →
Related Quotes
"Right after we published our first findings, we started getting letters from all over the country saying, "You know, …"
"Our understanding of how markets and businesses operate was passed down to us more than a century ago by a handful of…"
"Complexity theory is really a movement of the sciences. Standard sciences tend to see the world as mechanistic. That …"
"As we begin to understand , we begin to understand that we’re part of an ever-changing, interlocking, non-linear, kal…"
"A technology that by chance gains an early lead in adoption may eventually 'corner the market' of potential adopters,…"
"[Market outcomes] depends on the cumulation of random events."
"Where we observe the predominance of one technology or one economic outcome over its competitors we should thus be ca…"
"This paper has attempted to go beyond the usual static analysis of increasing-returns problems by examining the dynam…"
"The type of rationality we assume in economics — perfect, logical, deductive rationality — is extremely useful in gen…"
"Conventional economic theory is built is built on the assumption of diminishing returns. Economic actions engender a …"