Prices and knowledge: A market-process perspective

‘Bounded rationality’ and the price system 93ConclusionsSeveral market-process economists have made statements similarto those of Herbert Simon. However, these statements either weremade in the early stages of the development of the market-processperspective, or were isolated sentences better interpreted inentrepreneurial terms, given their occurrence in contexts showingan understanding of the dynamic nature of market processes. Theseisolated quotes only show how the entrepreneurial perspective hasbeen, and must still be, progressively developed and refined.Although some statements by market-process economists mayhave been somewhat ambiguous, as the entrepreneurialperspective becomes better articulated it becomes increasinglyclear that it has gone in important respects beyond the boundedrationalityapproach.FROM SIMON TO NELSONSimon has concentrated more on other issues and has not reallyattempted to provide a full theoretical picture of how marketswork. This deficiency leads him to oscillate, as shown, betweenan equilibrium view of markets and an ill-defined alternative.Why then, it may be asked, has so much space been devoted to hisideas? Isn’t Simon’s view of the role of prices in a marketeconomy almost identical to that of the equilibrium economistsconsidered in the previous chapter and, thus, subject to the samecriticisms? The justification for the present efforts has severalaspects to it. First, if there is a similarity on this matter betweenSimon’s ideas and the equilibrium approach, this is a finding initself, given that it is one of the areas in which he is perceived tobe offering an alternative view. In fact, this finding would serveas an antidote to the tendency, noted above, of some economiststo overlook how far market-process economists have gonebeyond Simon’s work in presenting a theory of markets.Also, the consideration of Simon’s ideas has drawn attention tointeresting problems of perception and discovery, and hashighlighted additional differences between considering prices as partof a competitive discovery procedure or merely as a means ofsummarizing large numbers of facts.