Prices and knowledge: A market-process perspective

78 Prices and knowledgeoccurring within an already perceived (discovered) environment.How it was perceived is left unexplained. Simon (1957:253–4)suggests also that it is possible that the agent’s failure to find asatisfactory option among perceived alternatives may lead him tosearch for additional ones. This suggestion reveals a need for aprocess of genuine discovery of these alternatives, such as thatdescribed by an entrepreneurial perspective. Yet this process isabsent in Simon’s framework.When Simon describes the individual as ‘searching’ for newalternatives he only avoids the problem of discovery, leaving itunsolved: to search for something one must first perceive, even ifonly dimly, some environment that will then be searched. (This isimplicitly recognized by standard search theory when the agentsare assumed to be endowed with at least probabilistic knowledgeregarding the area to be searched.) Entrepreneurial alertness isnecessary for the agent to first discover what his environment islike. Simon’s lack of awareness of this cognitive problem has alsobeen noticed by critics of his work in the area of ‘ArtificialIntelligence’. 29Also, whereas in Simon’s view individuals ‘scan’ rathermechanically all possible facts in search of the most satisfactoryalternative, the market-process view argues that entrepreneurialdiscovery does not happen in a purely random manner. According toKirzner (1983:29), ‘the notion of human action gives us…therecognition that people possess a propensity to discover what isuseful to them’. Admittedly,we know very little about the precise way in which pure profitopportunities attract entrepreneurial attention. But there can belittle doubt about the powerful magnetism which suchopportunities exert.(Kirzner 1984a:415)This, interestingly enough, is also an issue that has arisen in the areaof Artificial Intelligence when referring tothe contrast between the ability of human beings to ‘zero in’ onrelevant features of their environment while ignoring myriadirrelevancies and the enormous and admitted difficulty of artificialintelligence in determining what is relevant when the environment