Ravshan Hojimatov

Econo fights on Twitter have gotten crazy. I will hang around here for my mental health. #EconSky

AI-upgraded Notepad now exposes Windows users to critical exploit A critical remote code execution vulnerability found in the AI-upgraded Windows 11 Notepad has fueled renewed criticism of Microsoft's forced AI feature creep.

The AI features added to Notepad created a critical exploit vulnerable to loading a compromised txt file.

The fix is part of Patch Tuesday, so update your systems.

AI is not a feature I ever desired in Notepad. I should look into some alternatives...

Linkedin kind of makes sense because you can frame any theoretic discussion as something relevant to firms and organizations, which its recommendation algorithm loves. But giving up one corporation for another is also not ideal. Math people are happy on Mathstodon though.

Did the population grow by this much in the last 15 years?

I am wary of using evolving strategies to model humans. It seems from the outside that reinforcement learning or genetic algorithms are too good at optimizing and, thus, cannot be used to model humans with cognitive limitations. Do you have an opinion on that? Thank you.

Complex systems is an anti-result. It tells you how not to do economics. It is not particularly useful at saying what to do instead.

So, they just make it up as they go? #EconSky

Small autoregressive technology shocks is really hard to buy into, to be honest.

Nonlinearities in Economics This book argues that the economy has an underlying non-linear structure and that business cycles are endogenous, which allows a greater variety of models.

One of the best resources on economic dynamics
doi.org/10.1007/978-...

So much I still don't know!

Awesome visualization

Remember how super rich used to have a Vertu phone and average people had a Nokia. Now both use iPhone, so inequality has decreased in some consumer goods. At the same time it is undeniable that there is inequality in rent or even groceries. Which field studies this? #EconSky

There are a couple of insights from complexity that are actually useful, like emergence and path-dependence. Just making everyone aware of them is already enough contribution for the future of modeling. However, ultimately, there doesn't seem to be a bright future for it as a separate field.

Thanks for the feedback! The thread is not over yet. I will try to complete it within next few days. Tune in!

24. Together these three books make up the Big 3 of the Carnegie school

23. Satisficing = satisfy + suffice is, in a way, a bounded rational alternative to global optimization, where agents have a certain goal and they stop their search once that goal is reached - i.e. they don't continue their optimization indefinitely.

22. Bounded rational agents cannot optimize using first order conditions - either they are cognitively limited or the tasks they face are incredibly hard. What they do is they engage in a search for better performing decisions by trying new stuff and adopting what works better.

21. Of course, they didn't stop at identifying the limitations - they also proposed the ways to deal with them - "search" and "satisficing".

20. Cyert & March (1963) coined the term "bounded rationality". To be honest, I was surprised to learn it’s that old, I always assumed it was a newer idea from the Kahneman-Tversky-Thaler era. #EconTwitter

19. March and Simon (1958) formalized these ideas and talked in length about how organization must be modeled as different agents with cognitive limitations and conflicting goals coming together to work on a big project/task.

18. Herbert Simon (1947) was concerned about both perfect rationality and profit maximization assumptions and argued for more human-centric view of organizations, but these ideas were still vague and not formalized. btw you should read his autobiography "Models of My Life"

17. Carnegie school originated at Carnegie Institute of Technology aka Carnegie Mellon University in late 40s and 50s with the big trio - Simon, Cyert, and March.

16. In the meantime, a completely different stream of research had been quietly thriving. And it all started with "Carnegie school".

15. The mainstream view never bothered to unpack the black box of the "firm" to see what is going on inside of it. As late as 1992, Paul Migrom said about profit maximizing firms "yeah, we are aware that it is not that simple, but you know, we do it and you just deal with it"

14. This "rational expectations" approach to organizations has been very fruitful but it still had this classical idea of individuals as tools. Shapiro and Stiglitz (1984) said that the threat of unemployment is a great way to ensure that employees work harder. I mean...come on!

13. The question "what to put inside organization and what to leave to the market forces?" would later jump start an entire field of "New institutional economics".

12. Similarly, Williamson (1981) studied the reasons for why organizations even exist. He introduced "transaction cost theory", where markets/prices are good and all but have transaction costs and integrating some aspects of production into the firm might reduce these costs.

11. The "neoclassical" approach used all tools from math and econ and tackled the questions that is could answer using these tools. For example, agency theory showed how performance-based pay and profit sharing can be used to align individual and organizational incentives.