IDEAS home Printed from https://ideas.repec.org/a/wly/soecon/v68y2002i4p811-840.html
   My bibliography  Save this article

Was Hayek an Ace?

Author

Listed:
  • Nicolaas J. Vriend

Abstract

To address the question whether Hayek might have been an agent‐based computational economist (ACE) avant‐la‐lettre, I consider an ACE model concerning the phenomenon of information contagion. Alongside increasing returns, network externalities, and information cascades, information contagion has been presented in the literature as an explanation for particular patterns of macrobehavior that may seem at odds with the underlying micromotives. Whereas these other explanations have been shown to have a proper microfoundation, information contagion has remained a phenomenon that seemed to occur only when certain ad hoc rules of thumb for individual behavior are assumed. I show how information‐contagious behavior can emerge in a coevolutionary process of interacting adaptive agents, how this is related to various Hayekian themes, and how ACE research in general can be seen as an application of Hayek's methodological insights.

Suggested Citation

  • Nicolaas J. Vriend, 2002. "Was Hayek an Ace?," Southern Economic Journal, John Wiley & Sons, vol. 68(4), pages 811-840, April.
    • Handle: RePEc:wly:soecon:v:68:y:2002:i:4:p:811-840
    DOI: 10.1002/j.2325-8012.2002.tb00460.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/j.2325-8012.2002.tb00460.x
    Download Restriction: no
    File URL: https://libkey.io/10.1002/j.2325-8012.2002.tb00460.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kirman, Alan P. & Vriend, Nicolaas J., 2001. "Evolving market structure: An ACE model of price dispersion and loyalty," Journal of Economic Dynamics and Control, Elsevier, vol. 25(3-4), pages 459-502, March.
    2. Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-131, March.
    3. Narduzzo, Alessandro & Warglien, Massimo, 1996. "Learning from the Experience of Others: An Experiment on Information Contagion," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 5(1), pages 113-126.
    4. Katz, Michael L & Shapiro, Carl, 1986. "Technology Adoption in the Presence of Network Externalities," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 822-841, August.
    5. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680, Decembrie.
    6. Nicolaas J. Vriend, 2002. "Was Hayek an Ace?," Southern Economic Journal, John Wiley & Sons, vol. 68(4), pages 811-840, April.
    7. Roth, Alvin E. & Erev, Ido, 1995. "Learning in extensive-form games: Experimental data and simple dynamic models in the intermediate term," Games and Economic Behavior, Elsevier, vol. 8(1), pages 164-212.
    8. Ellison, Glenn & Fudenberg, Drew, 1993. "Rules of Thumb for Social Learning," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 612-643, August.
    9. Alan P. Kirman, 1994. "Economies with Interacting Agents," Working Papers 94-05-030, Santa Fe Institute.
    10. Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October.
    11. Michael L. Katz & Carl Shapiro, 1994. "Systems Competition and Network Effects," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 93-115, Spring.
    12. Leigh Tesfatsion, 2002. "Agent-Based Computational Economics," Computational Economics 0203001, University Library of Munich, Germany, revised 15 Aug 2002.
    13. Abhijit V. Banerjee, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(3), pages 797-817.
    14. Herbert A. Simon, 1955. "A Behavioral Model of Rational Choice," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 69(1), pages 99-118.
    15. Nicolaas J. Vriend, 2002. "Was Hayek an Ace?," Southern Economic Journal, John Wiley & Sons, vol. 68(4), pages 811-840, April.
    16. Gode, Dhananjay K & Sunder, Shyam, 1993. "Allocative Efficiency of Markets with Zero-Intelligence Traders: Market as a Partial Substitute for Individual Rationality," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 119-137, February.
    17. W. Brian Arthur, 1992. "On Learning and Adaptation in the Economy," Working Paper 854, Economics Department, Queen's University.
    18. Lane, David & Vescovini, Roberta, 1996. "Decision Rules and Market Share: Aggregation in an Information Contagion Model," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 5(1), pages 127-146.
    19. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-440, June.
    20. Dosi, Giovanni & Ermoliev, Yuri & Kaniovski, Yuri, 1994. "Generalized urn schemes and technological dynamics," Journal of Mathematical Economics, Elsevier, vol. 23(1), pages 1-19, January.
    21. Vriend, Nicolaas J., 1996. "Rational behavior and economic theory," Journal of Economic Behavior & Organization, Elsevier, vol. 29(2), pages 263-285, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Julie Chytilová & Natálie Reichlová, 2007. "Komplexní systémy v teoriích F. A. Hayeka a H. A. Simona [Complex systems in the theories of F. A. Hayek and H. A . Simon]," Politická ekonomie, Prague University of Economics and Business, vol. 2007(5), pages 694-707.
    2. Magda Fontana, 2006. "Computer simulations, mathematics and economics," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 53(1), pages 96-123, March.
    3. Roberto Leombruni, 2002. "The Methodological Status of Agent-Based Simulations," LABORatorio R. Revelli Working Papers Series 19, LABORatorio R. Revelli, Centre for Employment Studies.
    4. Jie-Shin Lin, 2005. "Learning in a Network Economy," Computational Economics, Springer;Society for Computational Economics, vol. 25(1), pages 59-74, February.
    5. Kirman, Alan P. & Vriend, Nicolaas J., 2001. "Evolving market structure: An ACE model of price dispersion and loyalty," Journal of Economic Dynamics and Control, Elsevier, vol. 25(3-4), pages 459-502, March.
    6. Fontana Magda, 2008. "The complexity approach to economics : a Paradigm shift," CESMEP Working Papers 200801, University of Turin.
    7. Nicolaas J. Vriend, 2002. "Was Hayek an Ace?," Southern Economic Journal, John Wiley & Sons, vol. 68(4), pages 811-840, April.
    8. Tomasz Kopczewski, 2015. "Think not calculate! Implementation of Felix Klein postulates in economic education with CAS software," Working Papers 2015-38, Faculty of Economic Sciences, University of Warsaw.
    9. David O'Sullivan & Mordechai Haklay, 2000. "Agent-Based Models and Individualism: Is the World Agent-Based?," Environment and Planning A, , vol. 32(8), pages 1409-1425, August.
    10. Buda, Rodolphe, 2001. "Les algorithmes de la modélisation : une analyse critique pour la modélisation économique," MPRA Paper 3926, University Library of Munich, Germany, revised Jul 2004.
    11. David Chavalarias, 2006. "Metamimetic Games : Modeling Metadynamics in Social Cognition," Post-Print hal-00007743, HAL.
    12. Richard Wagner, 2008. "Finding social dilemma: West of Babel, not east of Eden," Public Choice, Springer, vol. 135(1), pages 55-66, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nicolaas J. Vriend, 2002. "Was Hayek an Ace?," Southern Economic Journal, John Wiley & Sons, vol. 68(4), pages 811-840, April.
    2. A. Bassanini & G. Dosi, 1998. "Competing Technologies, International Diffusion and the Rate of Convergence to a Stable Market Structure," Working Papers ir98012, International Institute for Applied Systems Analysis.
    3. Mercure, Jean-François, 2018. "Fashion, fads and the popularity of choices: Micro-foundations for diffusion consumer theory," Structural Change and Economic Dynamics, Elsevier, vol. 46(C), pages 194-207.
    4. den Hartigh, E. & Langerak, F. & Commandeur, H.R., 2002. "The Effects of Self-Reinforcing Mechanisms on Firm Performance," ERIM Report Series Research in Management ERS-2002-46-MKT, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    5. Oz Shy, 2011. "A Short Survey of Network Economics," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 38(2), pages 119-149, March.
    6. Kirman, Alan P. & Vriend, Nicolaas J., 2001. "Evolving market structure: An ACE model of price dispersion and loyalty," Journal of Economic Dynamics and Control, Elsevier, vol. 25(3-4), pages 459-502, March.
    7. Liangjie Zhao & Wenqi Duan, 2014. "Simulating the Evolution of Market Shares: The Effects of Customer Learning and Local Network Externalities," Computational Economics, Springer;Society for Computational Economics, vol. 43(1), pages 53-70, January.
    8. Grazia Cecere & Nicoletta Corrocher & Cédric Gossart & Muge Ozman, 2014. "Lock-in and path dependence: an evolutionary approach to eco-innovations," Journal of Evolutionary Economics, Springer, vol. 24(5), pages 1037-1065, November.
    9. Hirshleifer, David & Teoh, Siew Hong, 2008. "Thought and Behavior Contagion in Capital Markets," MPRA Paper 9164, University Library of Munich, Germany.
    10. Heli Koski & Tobias Kretschmer, 2004. "Survey on Competing in Network Industries: Firm Strategies, Market Outcomes, and Policy Implications," Journal of Industry, Competition and Trade, Springer, vol. 4(1), pages 5-31, March.
    11. Troy Tassier, 2013. "Handbook of Research on Complexity, by J. Barkley Rosser, Jr. and Edward Elgar," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 39(1), pages 132-133.
    12. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, January.
    13. Goldfarb, Brent & Kirsch, David & Miller, David A., 2007. "Was there too little entry during the Dot Com Era?," Journal of Financial Economics, Elsevier, vol. 86(1), pages 100-144, October.
    14. Blackburn, Keith & Bose, Niloy, 2003. "Information, imitation and growth," Journal of Development Economics, Elsevier, vol. 70(1), pages 201-223, February.
    15. Natalie Svarcova & Petr Svarc, 2008. "Technology adoption and herding behavior in complex social networks," Working Papers IES 2008/07, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised May 2008.
    16. Antonio Doria, Francisco, 2011. "J.B. Rosser Jr. , Handbook of Research on Complexity, Edward Elgar, Cheltenham, UK--Northampton, MA, USA (2009) 436 + viii pp., index, ISBN 978 1 84542 089 5 (cased)," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1-2), pages 196-204, April.
    17. Slowak, André P., 2009. "Market fields structure & dynamics in industrial automation," FZID Discussion Papers 02-2009, University of Hohenheim, Center for Research on Innovation and Services (FZID).
    18. Hien Tran & Enrico Santarelli & Enrico Zaninotto, 2015. "Efficiency or bounded rationality? Drivers of firm diversification strategies in Vietnam," Journal of Evolutionary Economics, Springer, vol. 25(5), pages 983-1010, November.
    19. Jullien, Bruno, 2001. "Competing with Network Externalities and Price Discrimination," CEPR Discussion Papers 2883, C.E.P.R. Discussion Papers.
    20. Enrico Zaninotto & Alessandro Rossi & Loris Gaio, 1999. "Stochastic learning in coordination games: a simulation approach," Quaderni DISA 015, Department of Computer and Management Sciences, University of Trento, Italy, revised 29 Jun 2003.

    More about this item

    JEL classification:

    • B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:soecon:v:68:y:2002:i:4:p:811-840. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2325-8012 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.