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Choice and Action

Author

Listed:
  • David Lane
  • Franco Malerba
  • Robert Maxfield
  • Luigi Orsenigo

Abstract

In this essay, we argue that the rational choice (RC) provides an inadequate foundation for a theory of economic action. After defining RC sufficiently broadly to encompass much of the bounded rationality literature as well as neoclassical optimization theory, we present three principal arguments against RC. The first is cognitive: economic actors are experts at what they do, and the cognitive processes that underlie expertise are not consistent with RC, descriptively, prescriptively or positively. The second argument begins with the observation that economic action takes place in and through relationships between agents, and these relationships may generate actions that cannot be localized to individual agents. We argue that these generative relationships are essential to understanding such fundamental economic phenomena as innovation, and the actions that result from them are not amenable to analysis from a RC perspective. Finally, we argue that most economic agents lack the judgment and execution coherence required by RC. In a companion paper, we propose an alternative foundation for a theory of economic action that builds on the critique of RC presented in this paper.

Suggested Citation

  • David Lane & Franco Malerba & Robert Maxfield & Luigi Orsenigo, 1995. "Choice and Action," Working Papers 95-01-004, Santa Fe Institute.
    • Handle: RePEc:wop:safiwp:95-01-004
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    References listed on IDEAS

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    1. Arthur, W Brian, 1994. "Inductive Reasoning and Bounded Rationality," American Economic Review, American Economic Association, vol. 84(2), pages 406-411, May.
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    Cited by:

    1. Brian Loasby, 1999. "Making Connections - A Review of Neil M. Kay, Pattern in Corporate Evolution," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 6(3), pages 439-452.
    2. Muñoz, Félix & Encinar, María Isabel & Fernández-de-Pinedo, Nadia, 2014. "Intentionality and technological and institutional change: Implications for economic development," Working Papers in Economic Theory 2014/04, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
    3. Jintong Tang, 2010. "How entrepreneurs discover opportunities in China: An institutional view," Asia Pacific Journal of Management, Springer, vol. 27(3), pages 461-479, September.
    4. Mouck, Tom, 2000. "Beyond Panglossian theory: strategic capital investing in a complex adaptive world," Accounting, Organizations and Society, Elsevier, vol. 25(3), pages 261-283, April.
    5. Félix-Fernando Muñoz & María-Isabel Encinar, 2015. "Intentionality and the Emergence of Complexity: An Analytical Approach," Economic Complexity and Evolution, in: Andreas Pyka & John Foster (ed.), The Evolution of Economic and Innovation Systems, edition 127, pages 171-190, Springer.
    6. Guido Fioretti, 2005. "A Model of Primary and Secondary Waves in Investment Cycles," Computational Economics, Springer;Society for Computational Economics, vol. 24(4), pages 357-381, June.
    7. M. Laura Frigotto & Massimo Riccaboni, 2011. "A few special cases: scientific creativity and network dynamics in the field of rare diseases," Scientometrics, Springer;Akadémiai Kiadó, vol. 89(1), pages 397-420, October.
    8. Hodgson, Geoffrey M., 2004. "Reclaiming habit for institutional economics," Journal of Economic Psychology, Elsevier, vol. 25(5), pages 651-660, October.
    9. Russo, Margherita & Rossi, Federica, 2008. "Cooperation networks and innovation: A complex system perspective to the analysis and evaluation of a EU regional innovation policy programme," MPRA Paper 10156, University Library of Munich, Germany.
    10. Tony Fu-Lai Yu, 2003. "A subjectivist approach to strategic management," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 24(4), pages 335-345.
    11. David Lane & Robert Maxfield, 1995. "Foresight, Complexity, and Strategy," Working Papers 95-12-106, Santa Fe Institute.
    12. Takaaki Aoki & Kazuo Nishimura, 2017. "Global convergence in an overlapping generations model with two-sided altruism," Journal of Evolutionary Economics, Springer, vol. 27(5), pages 1205-1220, November.
    13. Oliver Budzinski, 2003. "Cognitive Rules, Institutions, and Competition," Constitutional Political Economy, Springer, vol. 14(3), pages 213-233, September.
    14. Luciano PILOTTI & Maria VERNUCCIO & Andrea GANZAROLI, 2011. "Tassonomia, topologia e tipologia dei sistemi produttivi locali in Italia: un tentativo di sintesi," Departmental Working Papers 2011-22, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    15. Mauro Caminati, 2012. "Self sustaining R&D networks," Department of Economics University of Siena 653, Department of Economics, University of Siena.
    16. Frederic Lee & Steve Keen, 2004. "The Incoherent Emperor: A Heterodox Critique of Neoclassical Microeconomic Theory," Review of Social Economy, Taylor & Francis Journals, vol. 62(2), pages 169-199.
    17. Félix-Fernando Muñoz & María-Isabel Encinar, 2019. "Some elements for a definition of an evolutionary efficiency criterion," Journal of Evolutionary Economics, Springer, vol. 29(3), pages 919-937, July.
    18. John Finch & Nicola Dinnei, 2001. "Capturing Knightian Advantages of Large Business Organisations Through Group Decision-making Processes," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 8(3), pages 379-403.
    19. Nicolai J. Foss, 1996. "Thorstein B. Veblen Precursor of the Competence-Based Approach to the Firm," DRUID Working Papers 96-15, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.

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