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INFORMATION, CHANCE, AND EVOLUTION: Alchian and the economics of self-organization
DOI link for INFORMATION, CHANCE, AND EVOLUTION: Alchian and the economics of self-organization
INFORMATION, CHANCE, AND EVOLUTION: Alchian and the economics of self-organization book
INFORMATION, CHANCE, AND EVOLUTION: Alchian and the economics of self-organization
DOI link for INFORMATION, CHANCE, AND EVOLUTION: Alchian and the economics of self-organization
INFORMATION, CHANCE, AND EVOLUTION: Alchian and the economics of self-organization book
ABSTRACT
The strong invisible hand theorem says there is emergent order in human affairs. Smith and Hayek described it; Alchian gave the evolutionary proof He showed that profit maximization is an emergent property of evolution when survival depends on positive profits. I extend Alchian's argument to consider how evolution discovers and adopts successful organizational forms. "Lock-in" on inefficient equilibria occurs, but noise and imitation, the evolutionary operators Alchian stressed, promote learning and adaptation which move the organizing dynamic off inefficient paths. Evolution is orders of magnitude faster than optimization; the relative time scales make the processes observationally distinguishable.