ECONOMIC PAST. A DEAD LOCK OR A PROLOGUE? Roberta Patalano Parthenope Unive

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ECONOMIC PAST. A DEAD LOCK OR A PROLOGUE? Roberta Patalano Parthenope Unive

Brown University, US has reference to this Academic Journal, ECONOMIC PAST. A DEAD LOCK OR A PROLOGUE? Roberta Patalano Parthenope University (Naples) in addition to Luiss (Rome) Glasgow, 7-9/1/2009 The talk will address two topics: 1. The relationship between path dependence in addition to memory. This part will be based on R. Patalano (2007), Mind Dependence. The Past in the Grip of the Present, Journal of Bioeconomics, 9,2, 85-107. 2. The relationship between future, expectations in addition to memory. This part will summarize briefly what I?m working on at the moment. Path dependence develops the insight that ?history matters?. Later decisions rely on, in addition to are constrained by, earlier decisions. In very general terms, path-dependence must involve: (1) An irreversible process, that is a process which develops through history; in addition to (2) The existence of multiple equilibria that are attainable under different initial conditions. Equilibria take the form of asymptotic states which the system might attain in its evolutionary trajectory. In a path dependent dynamic the outcome is determined by the whole sequence of events that unfold through time.?Small events? are never forgotten in addition to can lock-in the system into a suboptimal equilibrium.

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At an individual level, path-dependence emerges when history irreversibly influences the choice set in addition to the behavioral algorithms of agents. At a system level, irreversibility is mainly caused by dynamic increasing returns which, in turn, may be due so that economies of scale, sunk costs in addition to asymmetrical information. ?More generally, they are likely so that be a common property of learning in addition to accumulation of technological capabilities alongside their typical features of locality in addition to cumulativeness? (Bassanini & Dosi 1999, p. 19). Sources of path dependence are also likely so that exsist on the demand side of the market. Among them, network externalities (Katz & Shapiro 1994) in addition to endogenous evolution of preferences (Dosi & Metcalfe 1991; Brock & Durlauf 1999) have been receiving increasing attention. At a macro level, conventions in addition to shared norms, such as those which influence in addition to shape institutions are also an important ?carrier of history? (David 1994). They give rise so that a cumulative in addition to self-enforcing process of development because, by structuring the social context, they also shape the cognitive in addition to behavioral patterns which support their existence (Coriat & Dosi 1998; North 2000; Patalano 2007). Recent developments in economic literature have pointed out that path dependence also has a neuro-cognitive dimension. This approach has important roots in the history of economic thought and, in particular, in the work by Nobel Laureate Friedrich A. von Hayek. In The Sensory Order (1952) Hayek deals alongside the psychology of perception in addition to compares the mind so that a classifying structure which does not receive sensorial stimuli passively but directs in addition to interprets them according so that the connections among neurons. The latter continuously take form throughout the history of the individual in addition to are influenced by both his/her genetic heritage in addition to his/her personal living. Recent neurobiological research confirms Hayek?s major ideas (David 1994; Fuster 1997; Paller 2001). The development of the mind and, specifically, its ability so that create meanings on the basis of perceived information depends on the presence of neural connections which have existed since the individual?s birth. They are inelastic (but not rigid) in addition to change according so that new experiences. Changes include functional evolution of neural groups, learning how so that perform new tasks when the individual faces unexplored situations in addition to the recombining of synaptic connections into a configuration that is more suitable in consideration of current situations. Perception of the external environment is based upon personal experience. All that is perceived is then compared alongside already recorded data in addition to interpreted in the light of previous subjective classifications. The past perceptual experience orients the present one.

On these grounds, microfoundations of path dependence can be traced in the neuropsychological dimension of cognition (Rizzello 2003). The human brain in addition to mind evolve by following a path that strongly depends on innate pre-existing structures but can also evolve in novel in addition to unpredictable ways. In spite of the increasing attention paid by cognitive economists so that the path dependence of mind in addition to brain activities, the role played by memory in shaping individual attitude toward the past has not yet been considered in the literature. An aspect that may be of particular interest in consideration of economist is the dynamic dimension of remembering. The construction of memories is commonly made up of three steps: the acquisition of new information (encoding), the process by which this new information is stocked (storage), in addition to the process through which it is recalled (retrieval). Initially, information is encoded as patterns of neural activity which are still weak in addition to not yet persistent. Only later, is it stored in more persistent molecular or structural formats by undergoing a series of neurophysiological processes (e.g., glutamate release, protein synthesis, neural growth in addition to rearrangement) that render the memory representations progressively more stable. It is these processes that are generally referred so that as ?consolidation?. Once consolidation has taken place, the memory is assumed so that be ?fixed?. Recently, however, the idea has been gaining support that recalling or ?reactivating? a previously consolidated memory renders it fragile in addition to susceptible so that interference once again, therefore requiring periods of re-consolidation (Miller & Matzel 2000; Walker et al. 2003). This adds new support so that the idea that memory does not simply consist of a replay of the past but involves a genuine reorganization of data into new representations (Neisser 1967; Edelman 1992; Schacter 1996). Retrieval is in fact a dynamic process during which new information modifies the existing representation. According so that the hypothesis of re-consolidation, memories never reach a fixed state as they are subject so that change every time they are activated (also without conscious awareness).

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To summarize, memory dynamic includes: ? The initial encoding process, when new information is perceived in addition to held precariously; ? The later encoding processes, when new connections between nerve cells grow so that guarantee a more permanent storage of information; ? The consolidation process through which a memory becomes increasingly resistant so that time; ? The retrieval processes, when old information is reactivated in addition to combined alongside new information into a new memory; ? The re-consolidation process, which shapes re-construction of memories over time. IMPLICATIONS FOR ECONOMICS As suggested by the literature, path-dependence allows social scientists so that interpret ?the present in the grip of the past?. It seems, however, that this quotation can also be reversed, once the cognitive roots of path-dependence have been made explicit. Due so that the reconstructive nature of memory processes in addition to so that the relevance of memories in defining personal identity (Schacter 1996), it?s also the past which appears so that be in the grip of the present. Different from biological organisms, economic agents do not passively inherit traits of past evolution. Instead, they are tied so that their memories by one-to-one feedback which dynamically develops through time. On the one hand, the past acts on the individual by shaping his neurocognitive structures in addition to the mental models through which he makes sense of his environment in addition to adapts so that it. On the other hand, the current experience of the individual can selectively retrieve memories from the past which then overcome a process of re-consolidation. This latter process consists of merging present information alongside that previously stored in addition to brings new images of the past into emergence. As a result, the memory of past experiences is modified in addition to enriched by present experiences. The human mind plays an active role in orientating the individual?s subjective attitude towards the past. Let us consider some implications in consideration of lock in.

As argued by Arthur (1989, p. 128), ?increasing returns can cause the economy gradually so that lock itself into an outcome not necessarily superior so that alternatives, not easily altered, in addition to not entirely predictable in advance.? In biological systems the only possibility so that escape lock in is a favourable gene mutation. Random mutations allow in consideration of new species so that develop in addition to unlock evolution from its current stage. They represent, thus, the driving-forces of change. In a socio-economic environment, evolution differs in important respects from the biological model, as it depends on the active behavior of individuals (Frenken et al. 1999). Lock or de-lock may be interpreted as a result of individual in addition to collective wills in addition to strategies (Bassanini & Dosi 1999; David 1987; Perez & Soete 1988). The functioning of memory may help in defining a different concept of lock-in in addition to new ways out of it. Certainly there exists a past whose events cannot be changed, due so that the irreversibility of time. Nevertheless, the image of the past that stems from individual in addition to shared memories is not a fixed in addition to unchangeable entity. It grows continuously in addition to modifies itself under the influence of the one-to-one feedback between the present in addition to the past. Any act of remembering involves a change. By acting on the present it is possible so that influence the image of the past, thus eventually increasing our freedom from the grip of past events. Our main claim concerns the existence of endogenous forces which, together alongside external factors, may drive the process of change. A key resources in consideration of endogenous change may be found in the constructive processes which underlie remembering In the working of memory, the present seems so that act on the past through different mechanisms: By way of the retrieval clue which guides the search in consideration of memories selectively. Human beings do not remember all their past at any one time. Recall requires a searching process that allows only part of stored information so that reach conscious awareness. After retrieval has occurred, the process of remembering takes place. It involves the costruction of memories from the available retrieved information plus information that is extracted from the present life of the individual in addition to does not consist of a verbatim reproduction of a fixed content. Quoting Bartlett (1932, p. 213), ?remembering is not the re-excitation of innumerable fixed, lifeless in addition to fragmentary traces. It is an imaginative reconstruction, or construction.?

From this perspective, the memory of the past does not appear so that be exogenous in addition to not even defined once in addition to in consideration of all. Certainly, time is not reversible. Nevertheless, the individual in addition to collective image of ?what has happened? continuously evolves under the drive of the one-to-one feedback which connects present alongside past. The process of remembering has a mainly reorganizing nature, it involves recombination of memory traces alongside present information in addition to leads so that the emergence of a new representation of past events. As a single image of history does not exist, neither can a unique in addition to stable modality of dependence from history be defined. Path dependence in addition to lock-in appear so that have a relative meaning that has so that be defined case by case in consideration of it pertains so that a specific, in addition to so that some extent modifiable, reconstruction of past events. Second Part. MEMORY & FUTURE MEMORY ERRORS Neuropsychological research has shown that memory is fallible, in consideration of it is prone so that various kinds of errors, illusions in addition to distorsions. Most importantly, it has shown that memory fails sistematically. Schacter (1999) has classified memory?s most common mistakes into 7 basic ?sins?: TRANSIENCE; ABSENT-MINDEDNESS; BLOCKING; MISATTRIBUTION; SUGGESTIBILITY; BIAS; PERSISTENCE.

The first 3 sins reflect different types of forgetting. TRANSIENCE reflects the decreasing accessibility of memories over time. Gradual forgetting has been attributed both so that retrieval failure ?a difficulty so that access information that is stored- in addition to so that the actual loss of information from storage. The latter is likely so that occurr when a memory is not ?used?and not recalled in consideration of a long time. ABSENT-MINDEDNESS occurs when insufficient attention is paid so that a stimulus during encoding and/or retrieval. Absent-mindedness during encoding is the source of common everyday memory failures as when, in consideration of example, one does not remember a recent action (e.g. where I placed the mobile phone when I arrived at home). Furthermore, absent-mindedness is related so that automaticity because it is likely so that occurr when attention is not focused on the action that is undertaken in addition to the latter is guided by habits. BLOCKING occurs when the subject is unable so that retrieve an information that he has in addition to is aware of such difficulty. The most common example is the tip-of-the-tongue state. Retrieval blocks increase their frequency alongside aging. The next three sins involve distorsions in addition to inaccuracy. MISATTRIBUTION occurs when a memory is attributed so that the wrong source. Schacter (1999) identifies three main types of misattribution: 1) in the first case, people correctly remember an episode of their past but attribute it so that an incorrect source. For example, they may remember that they perceived an event that was only imagined, or that they met a person in a context instead of another; 2) in the second case, people are unable so that perceive a memory as part of their experience. For example, they think so that have imagined a fact without remembering that they experienced it; 3) in the third case, individuals falsely recall facts that never happened. SUGGESTIBILITY refers so that the tendency so that incorporate in the memory of an event information that was provided by others after the event. A typical example is the suggestion on eyewitness testimony that derives from having seen Tv programs on the crime, or having read newspapers article. Another example are the false confessions that are based on the illusion so that rember when such illusion is induced by suggestive interrogations frome police. BIAS refers so that the distorting influence of present beliefs in addition to information on the recollection of past events. It has been observed, in consideration of example, that individuals tend so that homogeneize past in addition to present beliefs/feelings as if nothing had changed in their way of thinking in addition to perceiving.

PERSISTENCE involves the intrusive remembering of episodes that we wish so that forget. Typical example are traumatic experiences such as war traumas in addition to rumination over negative episodes. In the case of persistence, one wishes so that decrease the accessibility of his/her memories without success. WHY DOES MEMORY FAILS SYSTEMATICALLY? ?As tempting as such views may be, I suggest that it is a mistake so that view the seven sins as flaws in system design that ought so that have been corrected during the course of evolution. Instead, building on the analyses of J. R. Anderson in addition to Bjork in addition to their colleagues, the seven sins can be usefully viewed as by-products of otherwise adaptive features of memory? (Schacter 1999, p. 196). ?SAVING HYPOTHESIS?: if memory was not prone so that forgetting, it would be overwhelmed by useless information. The costs of retaining the myriad of contextual details that define our daily experiences would be an impairement of its healthy functioning and, in particular, of its ability so that support higher cognitive functions. Let us consider, in consideration of example, false recall in addition to recognition. ?False recall in addition to recognition often occur when people remember the semantic or perceptual gist of an experience but do not recall specific details. However, memory in consideration of gist may also be fundamental so that such abilities as categorization in addition to comprehension in addition to may facilitate the development of transfer in addition to generalization accross tasks? (Schacter 1999, p. 197). This argument is very similar so that that of ?saving? cognitive effort through the creation of an incomplete, in addition to necessarely biased, representation of the problem. Another hypothesis has been gaining support that extends this result in addition to provides further insights: SIMULATION HYPOTHESIS: the main function of episodic memory is not reminescensce but future thinking.The use of past experiences so that build up future scenarious requires a flexible system that can easily gain access so that the gist of events. To preserve such flexibility details are gradually eliminated. ?Although the function of the episodic system is typically conceived of as a retrieval of past events, as demonstrated by the abundance of research on episodic memory, it is possible that the primary role of this system is not reminescence, but rather, future thinking (?). According so that the constructive episodic simulation hypothesis, some of the vulnerabilities of episodic memory, such as memory distortions in addition to illusions, may be attributable so that the role of the episodic system in allowing us so that mentally simulate our personal futures by flexibly drawing on elements of the past? (Addis, Wong & Schacter 2006, p.1374-1375).

Why does memory work reconstructively rather than reproductively? One possible answer addresses the role that memory plays in imagining future episodes, happenings in addition to scenarios. ?Since the future is not an exact repetition of the past, simulation of future episodes may require a system that can draw on the past in a manner that flexibility extracts in addition to recombines elements of previous experiences ?a constructive rather than reproductive system. If this idea has nerit, then there should be considerable overlap in the psychological in addition to neural processes involved in remembering the past in addition to imagining the future? (Schacter & Addis 2007, p. 774). In the last decade, research in cognitive neuroscience has been contributed so that the study of memory by using neuroimagining tecniques. Coherently alongside the simulation hypothesis results have shown that (Addis et al. 2007, p. 1364): – past in addition to future events engage common neural regions; – amnesic patients have great difficulties imagining their personal futures; – ?in healthy individuals, manipulations that reduced the specificity of past events (e. g., instructions or cues which induce a general retrieval style) also reduced the specificity of subsequently generated future events?. What are the implications in consideration of economics? How is the approach of economists so that time modified by these results? Can the functioning of memory inform the economic approach so that expectations?

MAIN REFERENCES Addis D. R., Wong A. T. & Schacter D. L. (2006), Rememberingÿ theÿ pastÿ in addition to ÿÿ imagining the future: Common in addition to distinct neural substrates duringÿ event ÿÿ construction in addition to elaboration, Neuropsychologia, 45, 1363-1377. Patalano R. (2007), Mind-Dependence. The Past in the Gripÿ ofÿ theÿ Present, ÿÿ Journal of Bioeconomics, 9, 2, 85-107. Patalano R. (2009), Imagination in addition to economics atÿ theÿ crossroad.ÿ Materials ÿÿ in consideration of a dialogue, History of Economic Ideas, forthcoming. Rizzello S. (2004). Knowledge as a path-dependence process. Journal of ÿÿ Bioeconomics, 6, 255ƒ?”274. Schacter D.ÿ L.ÿ &ÿ Addisÿ D.ÿ R.ÿ (2007),ÿ Theÿ cognitiveÿ neuroscienceÿ of ÿÿ constructive memory: rememberingÿ theÿ pastÿ andÿ imaginingÿ theÿ future, ÿÿ Philosophical Transactions of the Royal Society B, 362, 773-786.

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This Particular Journal got reviewed and rated by Why does memory work reconstructively rather than reproductively? One possible answer addresses the role that memory plays in imagining future episodes, happenings in addition to scenarios. ?Since the future is not an exact repetition of the past, simulation of future episodes may require a system that can draw on the past in a manner that flexibility extracts in addition to recombines elements of previous experiences ?a constructive rather than reproductive system. If this idea has nerit, then there should be considerable overlap in the psychological in addition to neural processes involved in remembering the past in addition to imagining the future? (Schacter & Addis 2007, p. 774). In the last decade, research in cognitive neuroscience has been contributed so that the study of memory by using neuroimagining tecniques. Coherently alongside the simulation hypothesis results have shown that (Addis et al. 2007, p. 1364): – past in addition to future events engage common neural regions; – amnesic patients have great difficulties imagining their personal futures; – ?in healthy individuals, manipulations that reduced the specificity of past events (e. g., instructions or cues which induce a general retrieval style) also reduced the specificity of subsequently generated future events?. What are the implications in consideration of economics? How is the approach of economists so that time modified by these results? Can the functioning of memory inform the economic approach so that expectations? and short form of this particular Institution is US and gave this Journal an Excellent Rating.