A Generative View of Rationality and Growing Awareness†

In this paper we contrast bounded and ecological rationality with a proposed alternative, generative rationality. Ecological approaches to rationality build on the idea of humans as "intuitive statisticians" while we argue for a more generative conception of humans as "probing organisms." We first highlight how ecological rationality's focus on cues and statistics is problematic for two reasons: (a) the problem of cue salience, and (b) the problem of cue uncertainty. We highlight these problems by revisiting the statistical and cue-based logic that underlies ecological rationality, which originate from the misapplication of concepts in psychophysics (e.g., signal detection, just-noticeable-differences). We then work through the most popular experimental task in the ecological rationality literature-the city size task-to illustrate how psychophysical assumptions have informally been linked to ecological rationality. After highlighting these problems, we contrast ecological rationality with a proposed alternative, generative rationality. Generative rationality builds on biology-in contrast to ecological rationality's focus on statistics. We argue that in uncertain environments cues are rarely given or available for statistical processing. Therefore we focus on the psychogenesis of awareness rather than psychophysics of cues. For any agent or organism, environments "teem" with indefinite cues, meanings and potential objects, the salience or relevance of which is scarcely obvious based on their statistical or physical properties. We focus on organism-specificity and the organism-directed probing that shapes awareness and perception. Cues in teeming environments are noticed when they serve as cues-for-something, requiring what might be called a "cue-to-clue" transformation. In this sense, awareness toward a cue or cues is actively "grown." We thus argue that perception might more productively be seen as the presentation of cues and objects rather than their representation. This generative approach not only applies to relatively mundane organism (including human) interactions with their environments-as well as organism-object relationships and their embodied nature-but also has significant implications for understanding the emergence of novelty in economic settings. We conclude with a discussion of how our arguments link with-but modify-Herbert Simon's popular "scissors" metaphor, as it applies to bounded rationality and its implications for decision making in uncertain, teeming environments.

More Thumbs Than Rules: Is Rationality an Exaptation?

The literatures on bounded and ecological rationality are built on adaptationism-and its associated modular, cognitivist and computational paradigm-that does not address or explain the evolutionary origins of rationality. We argue that the adaptive mechanisms of evolution are not sufficient for explaining human rationality, and we posit that human rationality presents exaptive origins, where exaptations are traits evolved for other functions or no function at all, and later co-opted for new uses. We propose an embodied reconceptualization of rationality-embodied rationality-based on the reuse of the perception-action system, where many neural processes involved in the control of the sensory-motor system, salient in ancestral environments have been later co-opted to create-by tinkering-high-level reasoning processes, employed in civilized niches.

Untangling Infinite Regress and the Origins of Capability

We argue that strategic management in general—and capability theory in particular—suffers from problems of infinite regress that can be traced to an unsatisfactory specification of initial conditions. We argue, first, that this has led to an overemphasis on path dependence, experience, and history, without sufficient attention on initial conditions: more proximate, decision-oriented punctuation points that can be used for better theoretical explanation. Second, we show how the initial conditions of theories are often not distinctively different from what is being explained, which prevents theory from providing credible specifications of causal mechanisms. Third, we highlight how the regress problem has led to a relatively casual borrowing of concepts from neighboring disciplines, which has created a mismatch between the aims of management theory and relevance to practice. We suggest research heuristics for how to deal with infinite regress problems, in order to develop more rigorous and relevant theories of capability and strategic management.

Firms, crowds, and innovation

The purpose of this article is to suggest a (preliminary) taxonomy and research agenda for the topic of "firms, crowds, and innovation" and to provide an introduction to the associated special issue. We specifically discuss how various crowd-related phenomena and practices-for example, crowdsourcing, crowdfunding, user innovation, and peer production-relate to theories of the firm, with particular attention on "sociality" in firms and markets. We first briefly review extant theories of the firm and then discuss three theoretical aspects of sociality related to crowds in the context of strategy, organizations, and innovation: (1) the functions of sociality (sociality as extension of rationality, sociality as sensing and signaling, sociality as matching and identity), (2) the forms of sociality (independent/aggregate and interacting/emergent forms of sociality), and (3) the failures of sociality (misattribution and misapplication). We conclude with an outline of future research directions and introduce the special issue papers and essays.

Game theory, conditional preferences, and social influence

Neoclassical noncooperative game theory is based on a simple, yet powerful synthesis of mathematical and logical concepts: unconditional and immutable preference orderings and individual rationality. Although this structure has proven useful for characterizing competitive multi-player behavior, its applicability to scenarios involving complex social relationships is problematic. In this paper we directly address this limitation by the introduction of a conditional preference structure that permits players to modulate their preference orderings as functions of the preferences of other players. Embedding this expanded preference structure in a formal and graphical framework provides a systematic approach for characterizing a complex society. The result is an influence network that allows conditional preferences to propagate through the community, resulting in an emergent social model which characterizes all of the social relationships that exist and which leads to solution concepts that account for both group and individual interests. The Ultimatum game is presented as an example of how social influence can be modeled with conditional preferences.