Uncertainty and economic sociology (original) (raw)

The new institutional economics and the theory of behaviour under uncertainty

Journal of Economic Behavior & Organization, 2006

The new institutional economics (NIE) is diverse in terms of the theory of behaviour under uncertainty. Some views are close to neoclassical economics, but others are similar to those held by heterodox economists. Distinctions between procedural and substantive uncertainty, weak and strong uncertainty and ambiguity and fundamental uncertainty help to identify different approaches to uncertainty in NIE. Regarding the influence of institutions on economics behaviour, not all NIE focuses on institutions as constraints and takes individuals as given. The dominant views of rationality in NIE are standard neoclassical maximization and bounded rationality, but alternative notions have also been defended.

Uncertainty in economics and the economy of uncertainty

Fìnansi Ukraïni, 2017

Uncertainty is a complex and “multilayered” object of multidisciplinary research. However, such concepts as “fundamental uncertainty”, "ambiguity”, "probability” and “risk” are common and universal. For a long time in economic theory, the problem of uncertainty remained, as it were, “behind the scenes”, its presence was rather implied than precisely formulated and served as some kind of "obscure background”, the meaning of which could "appear on the screen” only under certain circumstances, but from which researchers were accustomed to abstracting. The appearance of F. Knight s book “Risk, Uncertainty and Profit" changed the tradition of abstracting from the uncertainty factor. One of the significant characteristics of neoclassical theory is the neglect of strong types of uncertainty, in particular fundamental uncertainty. The problem of uncertainty is one of the central issues in the Keynesian, post-Keynesian, and institutional areas of economic theory. A deep institutional crisis is the main feature of the current state of the Ukrainian economy and the system of public administration. Now, the conditions of fundamental institutional uncertainty dominate in the national economy. Fundamental institutional uncertainty is the critical level of uncertainty when both permanent “failures” and the chronic institutional "incompetence” of the state, as well as special, different from the classical situation "failures" of market mechanisms of coordination, take place, and the national economic system actually functions as quasi-market. The economic behavior of both the state and business entities in such conditions loses their signs of rationality; economic policy, including fiscal and monetary policies, are mostly unpredictable. The consequences of fundamental institutional uncertainty are the transaction costs of a particular type - "transaction costs of alternative coordination”, which are necessary for the temporary maintenance of the economic system from disintegration. Keywords: uncertainty, risk, fundamental institutional uncertainty, transaction costs of alternative coordination. JEL classification: D81, E02, E12, E13.

Uncertainty, Conventional Behavior, and Economic Sociology

American Journal of Economics and Sociology, 2005

Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence.

Uncertainty: individuals, institutions and technology

cambridge Journal of Economics, 2004

In an attempt to refine the concept of uncertainty, this paper elaborates an ontology of the social world concentrating on individuals, institutions and technology. It shows the strong entwinement of the ontological aspects of the conceptualisation of uncertainty and epistemological ones. It highlights the ontological and epistemological dimensions of different concepts of uncertainty, such as fundamental uncertainty, procedural uncertainty, ambiguity and weak uncertainty (or risk). It also comments on a few writings that distinguish varieties of uncertainty with adjectives such as 'ontological' and 'epistemological' or 'epistemic'.

Uncertainty: a typology and refinements of existing concepts

Journal of Economic Issues, 2011

The present article proposes a typology of the main varieties of uncertainty considered by economists and refines existing concepts. This typology combines three distinctions, between: substantive and procedural uncertainty; weak and strong uncertainty; and ambiguity and fundamental uncertainty. These concepts refer, or fail to refer, to factors such as: a lack of information; complexity; the (im)possibility of building probability distributions that are unique, additive and reliable; structural change; etc. When refining these concepts, the article pays special attention to the conception of social reality underlying each concept. It refers to what each concept may imply about the complexity and changeability of social reality and the limitations and creative potential of the individuals that inhabit this reality, in addition to, in some cases, the roles of institutions and the features of the process of technological change.

The role of fundamental uncertainty in economics and decision-making

Economy & finance

The subject of this paper is the direct influence of uncertainty on economic decisions. The first part is a historical overview of the use of probability as a decisionmaking tool. The second part explores points of connection between Keynesian economics and uncertainty. After the discussion of epistemological and ontological uncertainty, the substance of fundamental uncertainty is elaborated. A separate section is dedicated to the role of ‘animal spirits’, conventions and ‘black swan’ phenomena. The closing section focusses on atomic and organic interrelationships in the economic material, the relation between complexity and uncertainty, and with the triangle probability-uncertainty-econometrics. The aim of the paper is to substantiate that uncertainty – whether it is termed ‘fundamental’, ‘radical’, ‘irreducible’ or else – is unavoidably and inevitably part of economic reasoning and decision-making.

The Eclipse of the Uncertainty Concept in Mainstream Economics

Journal of Economic Issues, 2011

This paper examines the decline in use of the Knight-Keynes uncertainty concept in mainstream economics. Using electronic archives, it shows that the frequency of its appearance in leading journals of economics has fallen rapidly from the 1950s. As well as to the declining popularity of Keynesian ideas since about 1970, the decrease in this use of the uncertainty concept is additionally related to the increasing mathematical formalization of economics and to the prevalence of a positivist emphasis on prediction. Some possible causes of this formalization are examined. Finally the essay discusses the prospects for a broadening of economics within universities, beyond a relatively narrow preoccupation with predictive formalism and including a reinvigorated Keynesianism.

The Economics of Radical Uncertainty

Economics: The Open-Access, Open-Assessment E-Journal, 2015

In situations of what we now describe as radical uncertainty, the core model of agent behaviour, of rational autonomous agents with stable preferences, is not useful. Instead, a different principle, in which the decisions of an agent are based directly on the decisions and strategies of other agents, is offered as a relevant core model. Preferences are not stable, but evolve. It is not a special case in such circumstances, but the general one. The author provides empirical evidence to suggest that as a description of behaviour in the modern world, economic rationality is applicable in a declining number of situations. He discusses models drawn from the modern literature on cultural evolution in which imitation of others is the basic strategy, and suggests a heuristic way of classifying situations in which the different models are relevant. The key point is that in situations where radical uncertainty is present, we require theoretical ‘null’ models of agent behaviour which are diffe...

Decision Making in the Age of Uncertainty: a Sociological Analysis

2021

This essay presents an analysis of the structural and cultural characteristics of postmodern society’s new capitalism, underscoring the fact that uncertainty, flexibility, mobility and risk are the latest categories of contemporary life, with which we need to interact and communicate constantly. It is necessary to aim at governing uncertainty by activating a new logic of the diffused empowerment of people aimed at promoting value for all the stakeholders by sharing objectives, development plans and the joint redesign of technologies, structures and processes. This is a perspective which places the person at the centre of strategic action, relaunches a New Humanism, invests in the cultural dimension, enhances that of value with a view to surpassing theutilitarian and technocentric paradigm while asserting a new anthropocentric.