“The inductive-reasoning system I have described above consists of a multitude of “elements” in the form of belief-models or hypotheses that adapt to the aggregate environment they jointly create. Thus it qualifies as an adaptive complex system. After some initial learning time, the hypotheses or mental models in use are mutually co-adapted. Thus we can think of a consistent set of mental models as a set of hypotheses that work well with each other under some criterion—that have a high degree of mutual adaptedness. Sometimes there is a unique such set, it corresponds to a standard rational expectations equilibrium, and beliefs gravitate into it. More often there is a high, possibly very high, multiplicity of such sets. In this case we might expect inductive reasoning systems in the economy—whether in stock-market speculating, in negotiating, in poker games, in oligopoly pricing, in positioning products in the market—to cycle through or temporarily lock into psychological patterns that may be non-recurrent, path-dependent, and increasingly complicated. The possibilities are rich.”

Source: Inductive Reasoning and Bounded Rationality (The El Farol Problem) (1994), p. 8

Adopted from Wikiquote. Last update June 3, 2021. History

Help us to complete the source, original and additional information

Do you have more details about the quote "The inductive-reasoning system I have described above consists of a multitude of “elements” in the form of belief-model…" by W. Brian Arthur?
W. Brian Arthur photo
W. Brian Arthur 16
American economist 1946

Related quotes

“This use of building blocks to generate internal models is a pervasive feature of complex adaptive systems.”

John H. Holland (1929–2015) US university professor

Source: Hidden Order - How Adaptation Builds Complexity (1995), Ch 1. Basic Elements, p. 37

August-Wilhelm Scheer photo
George E. P. Box photo
Russell L. Ackoff photo
Edward Fredkin photo

“Cellular automata are now being used to model varied physical phenomena normally modelled by wave equations, fluid dynamics, Ising models, etc. We hypothesize that there will be found a single cellular automaton rule that models all of microscopic physics; and models it exactly. We call this field DM, for digital mechanics.”

Edward Fredkin (1934) American physicist and computer scientist, a pioneer of digital physics

[An informational process based on reversible universal cellular automata, Physica D: Nonlinear Phenomena, 45, 1–3, September 1990, 254–270, https://www.sciencedirect.com/science/article/pii/016727899090186S, 10.1016/0167-2789(90)90186-S]

Orrin H. Pilkey photo

Related topics