Hayek on Expectations: The Interplay between two Complex Systems
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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