Using simple neural networks to analyse firm activity
AbstractIntroductionCharacteristically, in economics, the analysis of firm activity is based on a production function that defines a deterministic relationship between factor inputs and firm output. The analysis of the firm as an organisation takes a somewhat different approach. For instance, behavioural economics (for example Simon, 1955; March and Simon, 1958; Cyert and March, 1963), transaction cost theory (Williamson, 1975, 1985) and capabilities approaches (for example Foss and Loasby, 1998; Foss, 2005) emphasise that economic agents have inevitably incomplete information and knowledge and are at most boundedly or limitedly rational. The implication here is that while general principles governing intra-firm interaction can be specified, detailed organisational processes inside the firm are, for practical academic purposes, effectively unobservable. Hence, the usual analytical tools designed to analyse firm behaviour, based on production functions and optimising principles with full information, are in practice an oversimplification of firm activity (Loasby, 1999).
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Bibliographic InfoPaper provided by The University of Sheffield, Department of Economics in its series Working Papers with number 2005014.
Length: 33 pages
Date of creation: Jul 2005
Date of revision: Jul 2005
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-03-24 (All new papers)
- NEP-BEC-2007-03-24 (Business Economics)
- NEP-CMP-2007-03-24 (Computational Economics)
- NEP-KNM-2007-03-24 (Knowledge Management & Knowledge Economy)
- NEP-NEU-2007-03-24 (Neuroeconomics)
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