This article concerns the prescriptive function of decision analysis. Consider an agent who must choose an action yielding welfare that varies with an unknown state of nature. It is often asserted that such an agent should adhere to consistency axioms which imply that behavior can be represented as maximization of expected utility. However, our agent is not concerned the consistency of his behavior across hypothetical choice sets. He only wants to make a reasonable choice from the choice set that he (...) actually faces. Hence, I reason that prescriptions for decision making should respect actuality. That is, they should promote welfare maximization in the choice problem the agent actually faces. Any choice respecting weak and stochastic dominance is rational from the actualist perspective. (shrink)

This chapter discusses some of the most engaging natural phenomena, those in which highly structured collective behavior emerges over time from the interaction of simple subsystems. Emergence is generally understood to be a process that leads to the appearance of structure not directly described by the defining constraints and instantaneous forces which control a system. Over time “something new” appears at scales not directly specified by the equations of motion. An emergent feature also cannot be explicitly represented in the initial (...) and boundary conditions. A feature emerges when the underlying system puts some effort into its creation. These observations form an intuitive definition of emergence. For it to be useful, however, one must specify what the “something” is and in what manner it is “new.” Otherwise, the notion has little or no content, since almost any time-dependent system would exhibit emergent features. (shrink)

“Perhaps the most common objection to consequentialism is this: it is impossible to know the future…This means that you will never be absolutely certain as to what all the consequences of your act will be…there may be long term bad effects from your act, side effects that were unforeseen and indeed unforeseeable…So how can we tell which act will lead to the best results overall – counting all the results? This seems to mean that consequentialism will be unusable as a (...) moral guide to action. All the evidence available at the time of acting may have pointed to the conclusion that a given act was the right act to perform – and yet it may still turn out that what you did had horrible results, and so in fact was morally wrong. Indeed, if will never be possible to say for sure that any given act was right or wrong, since any event can continue to have further unseen effects down through history. Yet if it is impossible to tell whether any act is morally right or wrong, how can consequentialism possibly be a correct moral theory?”. (shrink)

This book argues that this powerful technique permits the social sciences to meet an explanation, in which one 'grows' the phenomenon of interest in an artificial society of interacting agents: heterogeneous, boundedly rational actors.

Technical, rigorous, and self-contained, this book will be useful for macroeconomists who seek to improve the robustness of decision-making processes.

What enables individually simple insects like ants to act with such precision and purpose as a group? How do trillions of individual neurons produce something as extraordinarily complex as consciousness? What is it that guides self-organizing structures like the immune system, the World Wide Web, the global economy, and the human genome? These are just a few of the fascinating and elusive questions that the science of complexity seeks to answer. In this remarkably accessible and companionable book, leading complex systems (...) scientist Melanie Mitchell provides an intimate, detailed tour of the sciences of complexity, a broad set of efforts that seek to explain how large-scale complex, organized, and adaptive behavior can emerge from simple interactions among myriad individuals. Comprehending such systems requires a wholly new approach, one that goes beyond traditional scientific reductionism and that re-maps long-standing disciplinary boundaries. Based on her work at the Santa Fe Institute and drawing on its interdisciplinary strategies, Mitchell brings clarity to the workings of complexity across a broad range of biological, technological, and social phenomena, seeking out the general principles or laws that apply to all of them. She explores as well the relationship between complexity and evolution, artificial intelligence, computation, genetics, information processing, and many other fields. Richly illustrated and vividly written, Complexity : A Guided Tour offers a comprehensive and eminently comprehensible overview of the ideas underlying complex systems science, the current research at the forefront of this field, and the prospects for the field's contribution to solving some of the most important scientific questions of our time. (shrink)

This article argues that the neoclassical era in economics has ended and is being replaced by a new era. What best characterizes the new era is its acceptance that the economy is complex, and thus that it might be called the complexity era. The complexity era has not arrived through a revolution. Instead, it has evolved out of the many strains of neoclassical work, along with work done by less orthodox mainstream and heterodox economists. It is only in its beginning (...) stages. The article discusses the work that is forming the foundation of the complexity era, and how that work will likely change the way in which we understand economic phenomena and the economics profession. (shrink)

A central theme in F. A. Hayek’s work is the contrast between principles and expediency, and the insistence that governments follow abstract general principles rather than pursue apparently expedient social and economic policies that seek to make us better off.2 This is a radical and striking thesis, especially from an economist: governments should abjure the pursuit of social and economic policies that aim to improve welfare and, instead, adhere to moral principles. In this chapter I defend this radical claim. I (...) begin by explicating and defending Hayek’s argument against the pursuit of expediency based on his analysis of economic and social complexity. I then turn to a rather more critical examination of his evolutionary account of moral principles. (shrink)