Economics And Cognitive Science

From the background, the science development, the main theory of cognitive science applied in economics and its relationship with sub-disciplines of economics, this paper makes a systematic analysis of cognitive economics. The paper tries to enable us to further research and apply cognitive economics and its analytic approaches,and further understand the cognitive mode of economic organizations,and improve economic theory's capability of explaining and predicting the future. This paper also provides a brief cognitive evaluation of cognitive economics and made a few referential significance to China.This paper is divided into five parts:The introduction part includes the research object and the research methods of cognitive economics, cognitive economics is a cross-disciplinary, which uses a cognitive science research methods, combined with some of the findings of psychology, researching the human cognitive process and the decision-making process ,then as a basis for the organization and the entire economic system research,Economists also established a number of cognitive models, then through experimental methods to validate the theory.This chapter also analyzed the contact of cognitive economics and some other sub-disciplines of economics, as well as the interflow among the disciplines. At the end of the chapter describes the structure of the article and possible innovations in general.The second part describes the theoretical background of cognitive economics, and introduced the main phase and the situation of development of cognitive economics in recent decades as representative figures'contribution approaches. The assumptions of traditional economics lacked theoretical basis, unable to solve the deviation between the theory and the real behavior issues, Even from the early times Marshall had take the research of human's minding as a research method to explain the economics problem. After Simon proposed the bounded rationality, cognitive approach in economics had a great development, in-depth study of the human mind and the ability to build and describe the real, it also gradually infiltrated into various sub-disciplines of economics .The third part and the forth part are the key points. The third part enumerated some people and relevant theories that play an important role in promoting the development the of cognitive economics .Cognitive economics is still not form fairly complete theory system, the subject'development and further research is mainly through the promoting effect of the representative people who made the subject developing more deep and gradually develop in the direction to the macro parts. Hayek was be affected by the Austrian School, as well as his tutor Menger, to consider that the analysis of the agent's thinking process, acquiring and dealing with the information process is very important. He contact mind and the institution ,try to explain the generation and evolvement of the order with a model of the interactive cooperation. Simon and March expanded cognitive method to the research of the nature of organizations, they considered organization is a kind of intelligent event which can learning, making decisions under the uncertainty with bounded rationality.In dynamic situation organization even the economic system are also do the decision-making with the"routinized behaviors".Kahneman and Tversky have made a seminal contribution of the decision-making under uncertainty ,they proposed the"prospect theory",and established value function and decision weighting functions to explain the real activities of the agent's in the real world. Kahneman Tversky also introduced several common heuristics bias.The forth part introduced the main achievement of cognitive science's application in economics. In the classical economics as stated as given conditions, individual rationality approach and static equilibrium analysis approach both have some limits.Cognitive science tries to solve these two limitations through two approaches: proposing procedural rationality through cognitive science and developing a self-orgnization of a system and emergent structures.About the rational beliefs, cognitive science regards beliefs as probability distributions. Beliefs need to constantly be revied.There are three revision contexts: revising, updating, and focusing. About the decision, cognitive science proposes four belief structures in the decision-making process: certainty, probabilitistically uncertainty, set-theoretically uncertainty and radical uncertainty.It solves the limited rationality issue by the two axioms of cognitive rationality and instrumental rationality.Decision-makers optimize their decisions by operational actions and informational actions.About the game theory,cognitive science explain player's three kinds of beliefs in the game and how to revise them in in the game,and how to eventually make the strategies to achieve an equilibium in the game. Moreover cognitive science also discusses the evolution of a game.With the information received and four basic principles,players make evolutions to the equilibriums and turn them into pure strategy Nash equilibriums and achieve some subgame perfect equilibriums. About information and knowledge economics, cognitive science make an analysis on the exchangability of information and its possible equilibriums.It gives an emphasis on cognitive phenomenon in describing the role and functioning of institutions.It discusses the possible convergence through communication by agents.The five part evaluated the theory significance of the cognitive economicsand expounded the practical significance of the theory. Cognitive economicstheories put forward many new research directions, and introduced some newconcepts and research methods, enriched the models and theories oftraditional economic theory, creating a broad research prospects for us. Inreality, this paper explained the role and value of analyzing the world from thecognitive view point, cognitive economics put forward some new concepts and research ideas worthy of China to mirror and application in recent economics development.The conclusion part, we summarized the subject from the cognitive economics methodology, the research and analysis methods, validation methods for discipline theory frame, and compared the research method and the basic assumptions of traditional economics, points out the development...