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Kludged

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  • Jeffrey C. Ely

Abstract

Is there reason to believe that our brains have evolved to make efficient decisions so that the details of the internal process are irrelevant? I develop a model which illustrates a limitation of adaptive processes: improvements tend to come in the form of kludges. A kludge is a marginal adaptation that compensates for, but does not eliminate, fundamental design inefficiencies. When kludges accumulate, the result can be perpetually suboptimal behavior even in a model of evolution in which arbitrarily large innovations occur infinitely, often with probability 1. (JEL D03, D87)

Suggested Citation

  • Jeffrey C. Ely, 2011. "Kludged," American Economic Journal: Microeconomics, American Economic Association, vol. 3(3), pages 210-231, August.
    • Handle: RePEc:aea:aejmic:v:3:y:2011:i:3:p:210-31
    Note: DOI: 10.1257/mic.3.3.210
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    References listed on IDEAS

    as
    1. Sandholm, William H. & Pauzner, Ady, 1998. "Evolution, Population Growth, and History Dependence," Games and Economic Behavior, Elsevier, vol. 22(1), pages 84-120, January.
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    4. Friedman, Milton, 1966. "Essays in Positive Economics," University of Chicago Press Economics Books, University of Chicago Press, number 9780226264035.
    5. Arthur J. Robson, 2001. "Why Would Nature Give Individuals Utility Functions?," Journal of Political Economy, University of Chicago Press, vol. 109(4), pages 900-929, August.
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    Cited by:

    1. Frenkel, Sivan & Heller, Yuval & Teper, Roee, 2012. "Endowment as a blessing," MPRA Paper 39430, University Library of Munich, Germany, revised 30 Apr 2012.

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    More about this item

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D87 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Neuroeconomics

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