Costly information and the evolution of self-organization in a small, complex economy

The core idea of evolution is that order in living systems emerges from a simple process of variation and selection. In biological systems we usually understand the source of variation as best described by the mechanisms of genetics. If human social systems are evolutionary systems, however, it would seem the variation that most explains the sources of change in these systems, occurs not from a genetic mechanism, but from individual learning. We use an evolutionary computational methodology to explore the way individual learning and adaptation lead to the evolution of persistent, self-organized social and economic activity. The basic idea behind these explorations is that the character and extent of self-organizing social and economic activity depends upon the way the environment frames the costs of individual learning and adaptation. We consider three different kinds of costs affecting learning and adaptation: the costs of autonomous searching, of communicating, and of deciding. Individuals respond to these costs by carefully, i.e., economically, choosing to learn about and interact with familiar agents in familiar arenas in which they have relatively secure expectations about the outcome of their actions. Emerging from these choices are persistent relationships among agents that lead to social and economic structure and to the imperfect coordination of aggregate production. The character and the extent of each are a function of the way the costs of information change with changing natural and human system conditions.