Cognitive Comparative Advantage and the Organization of Work: Lessons from Herbert Simon's Vision of the Future

In a marvelous but somewhat neglected paper, 'The Corporation: Will It Be Managed by Machines?' Herbert Simon articulated from the perspective of 1960 his vision of what we now call the New Economy the machine-aided system of production and management of the late twentieth century. Simon's analysis sprang from what I term the principle of cognitive comparative advantage: one has to understand the quite different cognitive structures of humans and machines (including computers) in order to explain and predict the tasks to which each will be most suited. Perhaps unlike Simon's better-known predictions about progress in artificial intelligence research, the predictions of this 1960 article hold up remarkably well and continue to offer important insights. In what follows I attempt to tell a coherent story about the evolution of machines and the division of labor between humans and machines. Although inspired by Simon's 1960 paper, I weave many other strands into the tapestry, from classical discussions of the division of labor to present-day evolutionary psychology. The basic conclusion is that, with growth in the extent of the market, we should see humans 'crowded into' tasks that call for the kinds of cognition for which humans have been equipped by biological evolution. These human cognitive abilities range from the exercise of judgment in situations of ambiguity and surprise to more mundane abilities in spatio-temporal perception and locomotion. Conversely, we should see machines 'crowded into' tasks with a well-defined structure. This conclusion is not based (merely) on a claim that machines, including computers, are specialized idiots-savants today because of the limits (whether temporary or permanent) of artificial intelligence; rather, it rests on a claim that, for what are broadly 'economic' reasons, it will continue to make economic sense to create machines that are idiots-savants.

The Old Ball Game: Organization of Nineteenth Century Professional Base Ball Clubs

The first professional base ball clubs came in two varieties: stock clubs, which paid their players fixed wages, and player cooperatives, in which players shared the proceeds after expenses. We argue that stock clubs were formed with players of known ability, while co-ops were formed with players of unknown ability. Although residual claimancy served to screen out players of inferior ability in co-ops, the process was imperfect due to the team production problem. Based on this argument, we suggest that co-ops functioned as an early minor league system where untried players could seek to prove themselves and eventually move up to wage teams. Empirical analysis of data on player performance and experience in early professional base ball provides support for the theory.

Do Exposure Suits Produce a 'Race to File'? An Economic Analysis of a Tort for Risk

Conventional tort law does not allow victims of exposure to a toxic substance to seek compensation until they develop actual symptoms of illness. This may effectively bar recovery because at the time the illness arises, injurers may be judgment proof. One possible response is to allow a tort for risk that allows victims to seek expected damages at the time of exposure. However, critics charge that this could create a 'race to file' wherein victims rush to file suit to ensure that they will get a share of the injurer's limited assets. We show that such a race may or may not occur in equilibrium, and that when it does occur, not all victims choose to file at exposure if bankruptcy is an inevitable result. If bankruptcy is not inevitable, it is possible that a tort for risk will trigger bankruptcy, although a no-bankruptcy equilibrium always exists and Paretodominates the bankruptcy equilibrium. We examine the consequences of the various tort-for-risk equilibria on the compensation of exposure victims, litigation costs, and injurer care.

The Organization of Consumption

No abstract available.