A number of proposals have been advanced in recent years for the development of “general systems theory ” that, abstracting from properties peculiar to physical, biological, or social systems, would be applicable to all of them. 1 We might well feel that, while the goal is laudable, systems of such diverse kinds could hardly be expected to have any nontrivial properties in common. Metaphor and analogy can be helpful, or they can be misleading. All depends on whether the similarities the metaphor captures are significant or superficial. It may not be entirely vain, however, to search for common properties among diverse kinds of complex systems. The ideas that go by the name of cybernetics constitute, if not a theory, at least a point of view that has been proving fruitful over a wide range of applications. 2 It has been useful to look at the behavior of adaptive systems in terms of the concepts of feedback and homeostasis, and to analyze adaptiveness in terms of the theory of selective information. 3 The ideas of feedback and information provide a frame of reference for viewing a wide range of situations, just as do the ideas of evolution, of relativism, of axiomatic method, and of

We propose a theory of asset pricing based on heterogeneous agents who continually adapt their expectations to the market that these expectations aggregatively create. And we explore the implications of this theory computationally using our Santa Fe artificial stock market. Asset markets, we argue, have a recursive nature in that agents ’ expectations are formed on the basis of their anticipations of other agents ’ expectations, which precludes expectations being formed by deductive means. Instead traders continually hypothesize—continually explore—expectational models, buy or sell on the basis of those that perform best, and confirm or discard these according to their performance. Thus individual beliefs or expectations become endogenous to the market, and constantly compete within an ecology of others ’ beliefs or expectations. The ecology of beliefs co-evolves over time. Computer experiments with this endogenous-expectations market explain one of the more striking puzzles in finance: that market traders often believe in such concepts as technical trading, “market psychology, ” and bandwagon effects, while academic theorists believe in market efficiency and a lack of speculative opportunities. Both views, we show, are correct, but within different regimes. Within a regime where investors explore alternative expectational models at a low rate, the market settles into the rational-

whether we necessarily need more cooperation, keeping, for the moment, the distinction between cooperation and trust blurred and their relationship implicit. According to the trite observation - Adam Smith wrote - if there is any society among robbers and murderers, they must at least abstain from robbing and murdering one another (Smith [1759] 1976: 86; see also Saint Augustine in Dunn, this volume). This trite observation serves a double purpose: it reminds us that basic forms of cooperation are inevitable if a society is to be at all viable, but it also points out, perhaps unwittingly, that there are instances of cooperation - notably those among robbers and murderers - that we may want to dispose of rather than improve. We may want less cooperation (and trust) rather than more, especially among those who are threatening us, and whose cooperation is a hindrance to ours. A priori, we cannot always say whether greater trust and cooperation are in fa

analyses and results presented in this paper are attributable to the authors and do not necessarily reflect concurrence by the Bureau of the Census. 1 I. Overview Recent research using establishment and firm level data has raised a variety of conceptual and measurement questions regarding our understanding of aggregate productivity growth. 1 Several key, related findings are of interest. First, there is large scale, ongoing reallocation of outputs and inputs across individual producers. Second, the pace of this reallocation varies over time (both secularly and cyclically) and across sectors. Third, much of this reallocation reflects within rather than between sector reallocation. Fourth, there are large differentials in the levels and the rates of growth of productivity across establishments within the same sector. The rapid pace of output and input reallocation along with differences in productivity levels and growth rates are the necessary ingredients for the pace of reallocation to play an important role in aggregate (i.e., industry) productivity growth. However, our review of the existing studies indicates that the measured contribution of such reallocation effects varies over time and across sectors and is sensitive to measurement methodology. An important objective of this paper is to sort out the role of these different factors so that we can understand the

It is widely acknowledged that coordination of large scale software development is an extremely difficult and persistent problem. Since the structure of the code mirrors the structure of the organization, one might expect that splitting the organization across time zones, cultures, and (natural) languages would make it difficult to assemble the components. This paper presents a case study of what indeed turned out to be the most difficult part of a geographically distributed software project, i.e., integration. Coordination problems were greatly exaggerated across sites, largely because of the breakdown of informal communication channels. The results imply that multi-site development can benefit to some extent ti-om stable plans, processes, and specifications. The inherently unpredictable aspects of projects, however, require communication channels that can be invoked spontaneously, by developers, as needed. These results shed light on the problems and mechanisms underlying the coordination needs of development projects generally, be they co-located or distributed.

The manufacturing sectors of less developed countries (LDCs) have traditionally been relatively protected. They have also been subject to heavy regulation, much of which is biased in favor of large enterprises. Accordingly, it is often argued that manufacturers in these countries perform poorly in several respects: (1) markets tolerate inefficient firms, so cross-firm productivity dispersion is high; (2) small groups of entrenched oligopolists exploit monopoly power in product markets; and (3) many small firms are unable or unwilling to grow, so important scale economies go unexploited. In this paper I assess each of these conjectures, drawing on plant and firm-level studies of LDC manufacturers. I find none to be systematically supported. Turnover is substantial, unexploited scale economies are modest, and convincing demonstrations of monopoly rents are generally lacking. Nonetheless I find some evidence that protection increases firms ’ price-cost margins and reduces average efficiency levels at the margin. Finally, although the econometric evidence on technology diffusion in LDCs is limited, it does suggest that protecting “learning ” industries is unlikely to foster productivity growth. All of this suggests that the general trend toward trade liberalization has yielded larger benefits that the traditional gains from trade.

The economic theory of rationality promises to equal mathematical logic in its importance for the mechanization of reasoning. We survey the growing literature on how the basic notions of probability, utility, and rational choice, coupled with practical limitations on information and resources, influence the design and analysis of reasoning and representation systems. 1 Introduction People make judgments of rationality all the time, usually in criticizing someone else's thoughts or deeds as irrational, or in defending their own as rational. Artificial intelligence researchers construct systems and theories to perform or describe rational thought and action, criticizing and defending these systems and theories in terms similar to but more formal than those of the man or woman on the street. Judgments of human rationality commonly involve several different conceptions of rationality, including a logical conception used to judge thoughts, and an economic one used to judge actions or...

Recent empirical and case study evidence documents a strong association between the adoption of computers and increased use of college educated or non-production workers. With few exceptions, the conceptual link explaining how computer technology complements skilled labor or substitutes for unskilled labor is less well developed. This paper applies an understanding of what computers do – the execution of procedural or rules-based logic – to develop and test a simple model of how the widespread adoption of computers in the workplace might alter workplace skill demands. Two essential contentions of our framework are that computer capital (1) substitutes for a limited and well-defined set of human activities, those involving routine (repetitive) cognitive and manual tasks; and (2) complements a second set of activities, those involving non-routine problem solving and interactive tasks. Under the assumption that routine and non-routine tasks are imperfect substitutes, the task framework implies measurable changes in the task content of employment. We examine these changes using representative samples of workers from 1960 to 1998 where individual characteristics are augmented with Dictionary of Occupational Title variables describing their occupations ’ requirements for routine and non-routine cognitive and manual skills. We find that computerization is associated with declining relative industry

Despite the importance to researchers, managers, and policy makers of how information technology (IT) contributes to organizational performance, there is uncertainty and debate about what we know and don’t know. A review of the literature reveals that studies examining the association between information technology and organizational performance are divergent in how they conceptualize key constructs and their interrelationships. We develop a model of IT business value based on the resource-based view of the firm that integrates the various strands of research into a single framework. We apply the integrative model to synthesize what is known about IT business value and guide future research by developing propositions and suggesting a research agenda. A principal finding is that IT is valuable, but the extent and dimensions are dependent upon internal and external factors, including complementary organizational resources of the firm and its trading partners, as well as the competitive and macro environment. Our analysis provides a blueprint to guide future research and facilitate knowledge accumulation and creation concerning the organizational performance impacts of information technology.

ABSTRACT: This paper studies alternative empirical strategies for estimating the effects of organizational design practices on performance, as well as the factors which determine organizational design, in a cross-section of firms. In particular, we propose an approach for estimating the parameters of an “organizational design production function. ” Further, we identify consistent tests for two classes of hypotheses: first, that some sets of organizational design practices are mutually complementary; and second, that adoption patterns are consistent with static optimization of the organization’s profit. We develop an economic model where multiple organizational design practices are endogenously determined. The model includes exogenous variation in the costs and returns to each of the individual practices, which is the source of the heterogeneity among organizations. In many empirical applications, some of these variables will be unobserved to the econometrician. The model is used to evaluate how different econometric strategies can be interpreted under alternative assumptions about the economic and statistical environment. Of particular interest are a set of results which demonstrate that, under plausible hypotheses about the joint distribution of the unobservables, different reduced-form approaches used in the existing literature to test