Paradigms and Conventions: Uncertainty, Decision Making, and Entrepreneurship.

• Author: Larson, Bruce

"People make decisions with information that is never perfect or complete." With these words Young Back Choi introduces his attempt to construct an approach to uncertainty which may serve as an alternative to that of neoclassical economics. The attempt, although at times uneven, is thought provoking.

According to Choi every decision involves an "understanding of a given situation, and, given that understanding, a selection of the most desirable course of action." For the most part, neoclassical economics has focussed on selection, while ignoring understanding. It is the treatment of selection and understanding that distinguishes Paradigms and Conventions.

In order to give a sense of the approach taken by Choi, consider

Proposition 1 (Paradigmatic Approach). People decide and act in a situation based on a paradigm identified as appropriate for that situation. Without a paradigm there will be no decision and no action.

In effect, the understanding of a decision maker is based upon a paradigm, which is a necessary condition for action. Since, therefore, human action flows from a paradigm, it follows that: action is indeterminate and the vision of each actor is selective; actors are committed to their paradigms, inflexible to their change, and accept their veracity; and thus there is the possibility of mistakes, the possibility of systematic error, and discontinuous behavior change. How, it might be asked, can one can determine if a person is not acting?

Choi, it should be noted, is an avowed methodological individualist for whom the entrepreneur has a very real role to play. To put things in the terms of Israel Kirzner, whom Choi refers to frequently (although not always approvingly), the inflexible attachment to paradigms ensures that there are always opportunities for gain, which entrepreneurs may realize if they function with paradigms which enable their perception. It is evident, then, that the approach taken...