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The Sea Battle Tomorrow: The Identity of Reflexive Economic Agents

Author

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  • John B. Davis

    (Department of Economics Marquette University)

Abstract
This paper develops a conception of reflexive economic agents as an alternative to the standard utility conception, and explains individual identity in terms of how agents adjust to change in a self-organizing way, an idea developed from Herbert Simon. The paper distinguishes closed equilibrium and open process conceptions of the economy, and argues the former fails to explain time in a before-and-after sense in connection with Aristotle's sea battle problem. A causal model is developed to represent the process conception, and a structure-agency understanding of the adjustment behavior of reflexive economic agents is illustrated using Merton's self-fulfilling prophecy analysis. Simon's account of how adjustment behavior has stopping points is then shown to underlie how agents' identities are disrupted and then self-organized, and the identity analysis this involves is applied to the different identity models of Merton, Ross, Arthur, and Kirman. Finally, the self-organization idea is linked to the recent 'preference purification' debate in bounded rationality theory regarding the 'inner rational agent trapped in an outer psychological shell,' and it is argued that the behavior of self-organizing agents involves them taking positions toward their own individual identities.

Suggested Citation

  • John B. Davis, 2020. "The Sea Battle Tomorrow: The Identity of Reflexive Economic Agents," Working Papers and Research 2020-01, Marquette University, Center for Global and Economic Studies and Department of Economics.
    • Handle: RePEc:mrq:wpaper:2020-01
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    File URL: https://epublications.marquette.edu/econ_workingpapers/69
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    Keywords

    reflexivity; Simon; Aristotle identity; self-fulfilling prophecy;
    All these keywords.

    JEL classification:

    • B11 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Preclassical (Ancient, Medieval, Mercantilist, Physiocratic)
    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology

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