Computational Perspectives I

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New Information Extends The Efficient Frontier

We start the discussion of computational perspectives by presenting a process-oriented view of the way information enhances individual productivity, one that is not suggested by the philosophy of economics.

Consider an apprentice who wishes to learn how to make wooden kitchen utensils by absorbing the relevant information from her mentor. Let us say that she knows a long, arduous process that leads to the production of a spoon. At this point, there are two types of information that may help her productivity. She could learn how to reach a new state: that is, to make forks as well as spoons. Or, she could learn to achieve an already known state via a better process: for instance, to make spoons faster and more economically. In either case, each additional option has a chance of improving the apprentice's optimal behavior.

Observations of this sort can be generalized as follows:

Hypothesis 6a: Know-how can increase productivity by creating new options for those who are unfamiliar with it. This includes options for recursively creating new process know-how. Sharing disseminates these options.

For a visual presentation of these ideas, please proceed to the next slide.

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