JF AAS August, 2000

Uncertainty in SSP Terms: Polar case of High Information Cost

S	S	P
HEINER  Bounded rationality.  High information processing cost even if info is available- fundamental uncertainty.  Competence-Difficulty gap.*      Fickle consumer  "Fickle" technology and  possible new products  ---------------------------------  *Different cognitive errors are possible:     Morphological, sensory, etc.	1. Try to use all available  information    2. Use SOP's (habits learned in business or social culture.  Advertizing.  Williamson's hostage  between firms is not  helpful against consumer defection. Allow firms to suppress new technology?  3. Change has been so rapid that no SOP's have  emerged.                             <------	1. Errors. Partly because can't predict others behavior.  2. Acts of others are  predictable.    Consumer less fickle.              3. Chaos. Can't predict.  If SOP is wrong,  does it correct the structure?  --------<<
LITTLECHILD  Future can't be represented  by subjective probability  distribution.  Don't even know names of variables.  Radical subjectivity.	1. U.S. firms related by  contract but outside is  fickle consumer and new  product maker. 2. Japanese Kiertsu  Firms are loyal to each other. Banks extend loan  repayment if necessary.  3. German banks loan to firms in the supply chain.	1. U.S. loses market share to Japanese and Germans.    2. Working together to create an imagined  future.    3. Ditto

Where is power and conflict in all this? Is it in persuasive images of the future? Tie to macro economics: What happens when actors are pessimistic about the future as in downward business cycle?

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