Katallactic Rationality

Abstract IS the well-known finding of experimental economics that talk is correlated with co-operation in prisoner-dilemma contexts related to Adam Smith's claim that trade requires language? Using Smith's postulate of the existence of a desire for approbation and the supposition that language carries approbation, we demonstrate how the ability to exchange approbation enhances the rationality of co-operation.     

Social Dimensions of Individualistic Rationality

We re‐examine the introduction of social dimensions into the economic conception of individual rationality. Most contributions in this area adopt the rational utility maximizer by adding social aspects into the domain of the agent's consideration. Thus, an inconsistency is created between sociality and opportunism. We overcome this by employing the Weberian distinction between instrumental and expressive rationality. It does not require the increase in the domain of agent's considerations and it captures society in a richer way with heterogeneity of social attitudes both to society as a system and to its management.     

Governmentality and Spatial Strategies: Towards Formalization of Street Vendors in Guangzhou,China

A new policy approach that seeks to formalize street vendors by immobilizing them in designated places has been taken as an alternative to exclusion in Guangzhou, China. This article develops an analytical framework for understanding this spatial formalization by drawing upon Foucault's concept of governmentality. Formalization can be understood as a form of spatial governmentality that seeks to guide the behaviour of informal economic individuals towards officially desired norms by creating bounded spaces. While the formalization programme reflects a moral form of political rationality that directs modern governments towards principles of social justice, it is fundamentally founded on a dispositional spatial rationality that imagines the dependence of social control on the ordering of space. However, this spatial rationality entails a tension between the goal of formalization and its practical effects, resulting in a failure to respect vital attributes of street vending and vendors’ counter‐responses to it. The article concludes by questioning the government's formalization approach, given its ignorance of the reality of informality, and opens up the question of what might be good formalization.     

The emergence of Zipf's Law in a system of cities: An agent-based simulation approach

This paper develops a spatial agent-based model to generate a system of cities that exhibits the statistical properties of the Zipf's Law. The numerical results suggest that the combination of bounded rationality and maximum heterogeneity of agents can produce a generic power-law relationship in the size distribution of cities, but does not always generate the Zipf's Law. We found sufficient conditions on the probability distribution of spatial reach to generate the Zipf's Law associated with unit power coefficient. Our model also indicates that the Zipf's Law breaks down unless the extent of agglomeration economies overwhelms the negative disagglomerating forces.     

On the role of small models in macrodynamics

This paper focuses on the role of small models in macrodynamics. It discusses the insights that I believe these models offer and the extent to which they can address some of the complex issues, such as heterogeneity and interactions among agents that are receiving increasing attention in the literature. I comment on what I view to be the most productive role for numerical simulations, and finally offer some brief comments in defense of the state of modern macroeconomic theory in light of the criticism it has received as a result of the recent financial crisis.     

GNP forecasts: How credible are they? A sequential test of consistency and rationality

In this study we examine the accuracy in the expectation formation process of a major macroeconomic forecast variable, namely the Gross National Product (GNP). The theoretical foundations are similar to the one used to study exchange rate expectations, i.e. a verification of consistency and rationality in forecast formation. A very reliable and continuos data set, the ASA-NBER survey is used. The Engle-Granger two step cointegration methodology and the Johansen-Juselius canonical correlation's (which has the smallest bias and dispersion) is applied to examine consistency in the gross national product expectation formation process. Our results support (reject) consistency at the short (long) forecast horizon. We then sequentially test for weak and strong form rationality using the Phillips-Hansen fully modified ordinary least squares procedure. This allows for an unrestricted cointegration test correcting for both endogeneity in the data and asymtotic bias in the coefficient estimates. Weak (strong) form rationality is upheld (rejected). This is in line with the literature which rejects orthogonality, but partially supports expectational rationality.     

Forecast Rationality Tests in the Presence of Instabilities,with Applications to Federal Reserve and Survey Forecasts

This paper proposes a framework to implement regression‐based tests of predictive ability in unstable environments, including, in particular, forecast unbiasedness and efficiency tests, commonly referred to as tests of forecast rationality. Our framework is general: it can be applied to model‐based forecasts obtained either with recursive or rolling window estimation schemes, as well as to forecasts that are model free. The proposed tests provide more evidence against forecast rationality than previously found in the Federal Reserve's Greenbook forecasts as well as survey‐based private forecasts. It confirms, however, that the Federal Reserve has additional information about current and future states of the economy relative to market participants. Copyright © 2015 John Wiley & Sons, Ltd.     

The foundation of stability in extensive games with perfect information

This paper studies the decision-theoretic foundation for the notion of stability in the dynamic context of strategic interaction. We formulate and show that common knowledge of rationality implies a “stable” pattern of behavior in extensive games with perfect information. In the “generic” case, our approach is consistent with Aumann’s [Aumann, R.J., 1995. Backward induction and common knowledge of rationality. Games and Economic Behavior 8, 6–19] result that common knowledge of rationality leads to the backward induction outcome.     

Experimental Study of Firm Bounded Rationality and the Pattern of Trade

This paper describes an experiment and simulation with features of a spatially explicit trading environment. Decision makers repeatedly make decisions about firm headquarters, input demands, and export patterns. A goal of this research is to determine if subjects’ management decisions reflect profit maximization, learning, or heuristic decision making. It also considers what impact decision makers’ bounded rationality has on the aggregate pattern of trade. Results indicate that bounded rationality in the form of learning and heuristic decision making are ubiquitous features of subjects’ decisions. This manifests as under‐reaction to trade‐driver stimuli and produces Trefler's missing trade, suggesting a behavioral basis for this anomaly.     

Rationality and Its Symbols: Signalling Effects and Subjectification in Management Consulting*

In service sectors such as management consulting, it is very difficult to measure the impact or success of a service even after it has been delivered. In these markets of goods between experience and credence, symbolic value is helpful and necessary to complement quality perceptions. The leading management consulting firms, in particular, do not only deliver data‐driven analyses but also represent and symbolize the rational approach to business issues. This article looks at the role of personnel selection in the context of quality symbolization. It argues that the predominant tool for personnel selection in the consulting sector, the case study, accounts for both a signalling effect of rationality to the business environment and a subjectification of consulting staff to the consulting culture and rationality beliefs. The case is made that, rather than leading to a valid selection of high‐performance personnel, the process of personnel selection has latent effects, which nonetheless contribute to the consulting industry's success.     

Practical Reason and Performance Appraisal

This paper examines responses of chairs of university departments to the news that they would be required to conduct a formal performance appraisal system. It is suggested that in order to understand resistance to appraisal we need to reject explanations invoking polarized antinomies – formal/informal, rational/political – and interrogate the concept of rationality. Drawing on MacIntyre's work, the paper examines the concept of practical reason to make sense of the chairs' responses and considers its relevance for understanding management and change in universities.     

Social Circumstances and Rationality:

Abstract Upon the uniformity in individuals’ decision‐making mechanism rests a great deal of the legitimacy of natural liberty. As we are all equally sovereign (cognitive‐wise), we only strike deals that inevitably make us better off. We all gain from trade and thus, as everyone is better off, so must be the whole of society. But could it be that people are rational yet not equally sovereign? In this paper, we examine Smith's interpretation of rationality, and we find that it is fundamentally a social concept. As such, the manifestation of rationality in individual behavior depends on how sophisticated is individuals’ access to public opinion. Consequently, individuals who are equally self‐interested may face very different sets of options, which are determined by their social circumstances. This difference may suggest that, although all agents may be motivated by the same objective, they cannot be considered as equally sovereign.     

Fairness in supply chain contracts: A laboratory study

Various contracts can be designed to coordinate a simple supplier–retailer channel, yet the contracts proposed in prior research and tested in a laboratory setting do not perform as standard theory predicts. The supplier, endowed with all bargaining power, can neither fully coordinate the channel nor extract all of the channel profit. We report on a sequence of laboratory experiments designed to separate possible causes of channel inefficiency. The three causes we consider are inequality aversion, bounded rationality, and incomplete information. It turns out that all three affect human behavior. Inequality aversion has by far the most explanatory power regarding retailers’ behavior. Incomplete information about the retailer's degree of inequality aversion has the most explanatory power in regards to the suppliers’ behavior. Bounded rationality affects both players, but is of secondary importance.     

Rationalizability in continuous games

Define a continuous game to be one in which every player's strategy set is a Polish space, and the payoff function of each player is bounded and continuous. We prove that in this class of games the process of sequentially eliminating “never-best-reply” strategies terminates before or at the first uncountable ordinal, and this bound is tight. Also, we examine the connection between this process and common belief of rationality in the universal type space of Mertens and Zamir (1985).     

双色球中奖号码随机性检验

随着彩票的不断推广,市面上出现了各种各样预测号码的书籍以及软件,吸引了众多彩民的目光,而这些预测的号码究竟是否有其科学合理性呢?这里就从双色球为例,来检验随机号码的随机性,看双色球的中奖号码是否是随机的,最终通过SPSS软件运用游程检验的方法得到双色球中奖号码是随机出现的,因此建议彩民不要轻信各种预测号码的软件及书籍,而是应该做到理性博彩。     

IN THE SHADOW OF ‘THE CITY’ YET TO COME: Auroville,Developmentalism and the Social Effects of Cityness

This article focuses on the planned community of Auroville in Tamil Nadu, India, founded in 1968. Building on critical readings of the settlement that have drawn attention to the power imbalance in its relationships with surrounding villages, the article delineates the ways that a geographical imagination of cityness has been a key component of the settlement's development and the forms of neo-coloniality in which it has been implicated. Drawing on archival and published sources as well as ethnographic research, the article discusses three ways in which the settlement performs a sense of its own ‘cityness-to-come’: first, the architectural discourse and planning rationality central to Auroville's identity; second, its agonistic public sphere vis-à-vis architecture and planning, and third, its ethos of learning and evolution, and the settlement's developmental teleology. In so doing, the article shows how ‘the city’ conceived as a textual and spatial promise, as well as a utopian aspiration, works ideologically to constitute the settlement itself, but also to precipitate social effects and uneven power relationships with village communities in this region. To sum up, this article develops an argument about the neo-colonial social work done by ‘the city’ conceived as text.     

Debating the State in Private Housing Neighborhoods: The Governance of Homeowners' Associations in Urban Shanghai

This article examines the transformation of state power in urban China by investigating how the state governs a newly emerging type of neighborhood organization connected with housing privatization, the homeowners' association (HA). Based on a series of extensive field research visits in Shanghai from 2006 to 2012, it analyzes the contradictory rationales behind HA policies in Shanghai, and elaborates the debates between state actors and non‐state actors on the boundary of state intervention. It finds that the state in Shanghai has engaged multiple goals in its governance of the HAs: regularizing the real estate market, promoting self‐organization at the neighborhood level, and channeling homeowners' participation in urban politics. The neoliberal rationality of governing through subjects' autonomy and a tradition of the socialist discourse on party leadership co‐exist in the state's toolkit for governance. But the state's capacity to coordinate these different governing techniques varies across fields. I highlight the dilemma a non‐liberal state confronts in cultivating self‐organizing and self‐responsible individuals. This contrasts with some of the studies on ‘China's neoliberal state’, which argue that the bureaucratic system has been resilient in coping with the contradictions and imbalances inherent in neoliberalism.     

Economy as a Social System: Niklas Luhmann's Contribution and its Significance for Economics

Niklas Luhmann's (1927–1998) ambitious research project was aimed not only at describing society as a global social system, but it also analyzed various subsystems (including an economic one). The article assesses Luhmann's vision of the economy, summarized mainly in his Wirtschaft der Gesellschaft, wherein he addresses basic economic notions: the economic system, money, prices, rationality, and the market. I then interpret his ideas in the context of modern discussions in economics (intersubjective structures, complex systems, and evolutionary modeling). I also propose some heuristics implied by Luhmann's economic ontology, which are potentially interesting for methodological and theoretical strategies of modern economics.     

Rhetorical Institutionalism: Language,Agency, and Structure in Institutional Theory since Alvesson 1993

In 1993, Mats Alvesson published ‘Organizations as Rhetoric’. In his paper, Alvesson proposed that knowledge was ambiguous and that rhetoric was therefore critical to the construction and operation of institutions and organizations. Moreover, he argued that in such an ambiguous and thus rhetorical world, knowledge operated as an institutionalized myth and rationality surrogate. Alvesson's insights helped inspire and initiate one of the most promising and growing areas of institutional research: rhetorical institutionalism. Rhetorical institutionalism is the deployment of linguistic approaches in general and rhetorical insights in particular to explain how institutions both constrain and enable agency. In this paper, we trace these original insights and discuss the benefits of continuing the integration of rhetorical ideas in institutional research. In addition, we propose and develop a rhetorical model of institutionalism that can spearhead research and conclude with some direct suggestions for future research.     

Manufacturing and Distribution Strategies,Distribution Channels,and Transaction Costs: The Case of Parallel Imported Automobiles

We examine how constraints on transnational corporations' official distribution channels, asset specificity, and bounded rationality of franchise dealers and parallel traders contribute to the sustainability of the parallel importation of automobiles. The manufacturing and distribution strategies employed by transnational corporations considerably add to the regional differences in the pricing and availability of specific models, as well as vehicle specifications. These necessary conditions enable opportunistic parallel traders to engage in arbitrage. The asset specificity of franchise dealers, bounded rationality, and opportunism of dealers and arbitrageurs sustain the parallel importation of automobiles. Copyright © 2012 John Wiley & Sons, Ltd.