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Hayek on Expectations: The Interplay between two Complex Systems

Listed author(s):
  • Agnès Festré

    (GREDEG CNRS
    University of Nice Sophia Antipolis, France)

  • Pierre Garrouste

    (GREDEG CNRS
    University of Nice Sophia Antipolis, France)

In this paper we argue that Hayek’s expectations approach can be better understood by taking account of the interplay between two related complex systems: the complex system of cognition and the complex system of behavioral rules of action. The former is located at the individual level and concerns the way human beings perceive the physical world as and well as their fellow men. The second one concerns how human beings behave (essentially how they follow rules) and form expectations based on the properties of their cognitive systems, such that the system of rules to which they adhere provides higher order regularities which preserve their existence over time, that is, the existence of societies. The article is organized as follows. Section 1 provides a detailed description of these complex systems and emphasizes their differences. Section 2 deals with the interplay between these two systems, and discusses the consequences of forming expectations. Section 3 sums up the paper’s main arguments.

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File URL: http://www.gredeg.cnrs.fr/working-papers/GREDEG-WP-2016-13.pdf
File Function: First version, 2016
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Paper provided by Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis in its series GREDEG Working Papers with number 2016-13.

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Length: 43 pages
Date of creation: May 2016
Handle: RePEc:gre:wpaper:2016-13
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  1. Agnès Festré & Pierre Garrouste, 2009. "The economic analysis of social norms: A reappraisal of Hayek’s legacy," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 22(3), pages 259-279, September.
  2. Anufriev, M. & Hommes, C.H. & Philipse, R., 2010. "Evolutionary Selection of Expectations in Positive and Negative Feedback Markets," CeNDEF Working Papers 10-05, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
  3. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-477, June.
  4. William Butos & Roger Koppl, 1993. "Hayekian expectations: Theory and empirical applications," Constitutional Political Economy, Springer, vol. 4(3), pages 303-329, September.
  5. Koppl, Roger, 2010. "Some epistemological implications of economic complexity," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 859-872, December.
  6. Lewis, Paul, 2012. "Emergent properties in the work of Friedrich Hayek," Journal of Economic Behavior & Organization, Elsevier, vol. 82(2), pages 368-378.
  7. Birner Jack, 1995. "The surprising place of cognitive psychology in the work of F.A. Hayek," Research Memorandum 019, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  8. Bruce Caldwell, 1997. "Hayek and Socialism," Journal of Economic Literature, American Economic Association, vol. 35(4), pages 1856-1890, December.
  9. Ludwig M.P. van den Hauwe, 2011. "Hayek, Gödel, and the case for methodological dualism," Journal of Economic Methodology, Taylor & Francis Journals, vol. 18(4), pages 387-407, December.
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