Received: by alpheratz.cpm.aca.mmu.ac.uk id MAA07331 (8.6.9/5.3[ref firstname.lastname@example.org] for cpm.aca.mmu.ac.uk from email@example.com); Fri, 28 Apr 2000 12:28:04 +0100 Message-Id: <200004281128.MAA07331@alpheratz.cpm.aca.mmu.ac.uk> Errors-To: firstname.lastname@example.org Precedence: bulk Reply-To: email@example.com Sender: firstname.lastname@example.org To: CAMREC list members <email@example.com> From: the Campaign for Real Economics <firstname.lastname@example.org> Date: Fri, 28 Apr 2000 12:02:13 +0100 Subject: CAMREC: Thought: rationality is more flexibility than optimality
There are many characterisations of rationality. Perhaps the most
fundermental is thought processes that are good at achieving an entity's
goal(s). The most fundermental goal of many entities (animals, species,
families, firms, etc) is survival.
In terms or achieving survival an ability to adapt adequately to new
situations is often more important than being able to optimise behaviour
in familiar ones. If the environment is in any sort of state of
self-organised criticality, so that changes of indefinite size will
occur unpredictably, then longer-term survival will depend on adapting
to unpredicted novel and radical changes rather than on the ability to
do well in the periods between these crises.
Thus rationality is better characterised by flexibility than optimality
(especially in the long term).
The caveats are (1) if the environment is in a such a stable state that
flexibility is reducndant (2) if the periods of doing well in stable
periods is used to store resources for times of crises and (3) if the
period of doing well is used to increase the ability to be flexible. (1)
is rare for many entities (especially economic entities) (2) is often
limited since storage is costly and detracts from short-term success and
there is often little incentive to implement (3) when things are going
well in stable conditions (as Bill Gates is supposed to have said "You
don't learn anything from success").
I think part of the reason that people overestimate the importance of
optimality is that entities will often use indicators as "proxies" for
danger. This is beacuse it is useless waiting for extinction before
trying to avoid it. By this reading attention to indicators (such as
profit, cash flow, share price etc.) is often more used to indicate
danger than as a goal for optimisation.
Centre for Policy Modelling
Manchester Metropolitan University
Aytoun Building, Aytoun Street, Manchester M1 3GH, UK.
Tel. +161 247 6479 Fax. +161 247 6802
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