Page 32 - Complexity Perspective_Neat

paribus (all things being equal, which they never are) in economic
theory. The impact of this kind of thinking is a first cousin to the old
military saw that no plan survives its first contact with the enemy.
Recognition of the true uncertainty inherent in a dynamic, largely
unpredictable, complex context, is reflected in the academic
community in five lines of thought that seek to move us away from
pure rational (reductionist) thinking:

● Sensemaking: The construct of sensemaking was originated by
sociologist Karl Weick, the academic definition of sensemaking
is "the ongoing retrospective development of plausible images
that rationalize what people are doing" (Weick, Sutcliffe, &
Obstfeld, 2005, p. 409). The key terms are 'retrospective'
implying a rationalization of the past (which we know is
weakened by inadequate data) as a guide to the future, and
'plausible' implying that the acceptance of the rationalization is a
social process of group agreement open to corruption by
inadequate understanding, personal bias, and misinterpretation
of the originator's ideas. Sensemaking leads to the development
of a narrative about what has happened, what is happening, and
what will happen. Such narratives become embedded and help
form part of the accepted history or myth of society.

● Bounded Rationality: Originated by polymath Herbert
Simon, bounded rationality is the idea that when individuals
make decisions, their rationality is limited by the tractability of
the problem, the cognitive limitations of their minds, and the
time available to make the decision. Decision-makers in this
view act as satisficers, seeking a satisfactory solution rather
than an optimal one. Bounded rationality has become a
foundation concept of behavioral economics as the subject tries
to shake off the shackles of reductionist, rational thinking.

● Heuristics: The study of the role of heuristics was popularized
in the business context by Tversky and Kahneman. Heuristics
are basically the idea of a "rule of thumb", a
simplifying approach to problem-solving, learning, or discovery.
Heuristic thinking employs a practical method not guaranteed to
be optimal or perfect, but sufficient for the immediate goals.
Where finding an optimal solution is impossible or impractical,

32
©Business Games Works 2018 (V1 Beta)