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Hayek's theory on complexity and knowledge: dichotomies, levels of analysis, and bounded rationality

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  • Stefano Fiori

Abstract

Hayek maintains that models of complexity must consider two closely interrelated factors: the large number of variables and the connections among them. These two conditions, which define complex phenomena, exhibit a different logical dimension. The former (the 'large number of variables') describes complexity in quantitative (numerical) terms; the latter provides a view of complex phenomena in logical-relational terms, and it is evoked to explain the emergent properties of the whole. Despite the close relation between these concepts, the first notion essentially prevails over the latter, delineating a distinctive configuration of the theory. This perspective also emerges when Hayek defines 'dispersed' and 'inarticulate' knowledge, and introduces the concept of the 'explanations of the principles'. Finally, the notion of level of analysis is discussed in order to interpret Hayek's two concepts which define complexity.

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  • Stefano Fiori, 2009. "Hayek's theory on complexity and knowledge: dichotomies, levels of analysis, and bounded rationality," Journal of Economic Methodology, Taylor & Francis Journals, vol. 16(3), pages 265-285.
    • Handle: RePEc:taf:jecmet:v:16:y:2009:i:3:p:265-285
    DOI: 10.1080/13501780903128548
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    Cited by:

    1. Vicente Moreno‐Casas & Philipp Bagus, 2022. "Dynamic efficiency and economic complexity," Economic Affairs, Wiley Blackwell, vol. 42(1), pages 115-134, February.
    2. Paul Lewis, 2017. "The Ostroms and Hayek as Theorists of Complex Adaptive Systems: Commonality and Complementarity," Advances in Austrian Economics, in: The Austrian and Bloomington Schools of Political Economy, volume 22, pages 35-66, Emerald Group Publishing Limited.
    3. Arnaud Zlatko Dragicevic, 2022. "Exchange Networks with Stochastic Matching," Games, MDPI, vol. 14(1), pages 1-18, December.
    4. Peter Lewin, 2014. "Hayek and Lachmann," Chapters, in: Roger W. Garrison & Norman Barry (ed.), Elgar Companion to Hayekian Economics, chapter 8, pages 165-194, Edward Elgar Publishing.
    5. Oguz, Fuat, 2020. "Complexity of Electricity Markets and their Regulation: Insights from the Turkish Experience," MPRA Paper 99261, University Library of Munich, Germany.
    6. Fuat Oğuz, 2020. "Hayekian complexity and the role of regulation in electricity markets," Economic Affairs, Wiley Blackwell, vol. 40(3), pages 406-418, October.

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