Testing for the emergence of spontaneous order

Abstract

We report on an experimental investigation of the emergence of Spontaneous Order, the idea that societies can coordinate , without government intervention, on a form of society that is good for its citizens, as described by Adam Smith. Our experimental design is based on a production game with a convex input provision possibility frontier, where subjects have to choose a point on this frontier. We start with a simple society consisting of just two people, two inputs, one final good and in which the production process exhibits returns to specialisation. We then study more complex societies by increasing the size of the society (groups of 6 and 9 subjects) and the number of inputs (6 and 9 inputs respectively), as well as the combinations of inputs that each subject can provide. This form of production can be characterised as a cooperative game, where the Nash equilibrium predicts that the optimal outcome is achieved when each member of this society specialises in the provision of a single input. Based on this framework, we investigate whether Spontaneous Order can emerge, without it being imposed by the government. We find strong evidence in favour of the emergence of Spontaneous Order, with communication being an important factor. Using text classification algorithms (Multinomial Naive Bayes) we quantitatively analyse the available chat data and we provide insight into the kind of communication that fosters specialisation in the absence of external involvement. We note that, while communication has been shown to foster coordination in other contexts (for example, in public goods games, market entry games and competitive coordination games) this contribution is in the context of a production game where specialisation is crucial.

Division of Labor and the Organization of Knowledge in Production: A Laboratory Experiment

“…They observe that groups are quite adept at realizing internal coordination, but efficient specialization and trade across groups are harder to establish. Georgalos & Hey (2020) investigate whether group members coordinate in a production environment with returns to specialization. They do not find evidence for spontaneous order and optimal division of labor without communication.…”

Emergent Properties of Organizational Sensemaking Systems: A Grounded Theory Assessment of The HITEC Project

“…Ultimately, the theoretical basis for making a distinction between individual-level and organizational-level constructs rests on the now widely accepted concept of emergence – where novel traits, characteristics, properties, and behaviors can be expected to appear as systems become more complex (Gao & Xu, 2021; Georgalos & Hey, 2020; Walsh & Brady, 2019). The concept of emergent properties is also a significant aspect of systems theory , which is a theoretical perspective that upholds that the properties of the totality of a system offer far more variety than the properties of any single component of the system (Gao & Xu, 2021; Scott, 2001; Waterson, 2015).…”

Strategic environment effect and communication

“… See Brandts et al (2019) for a survey. As far as we are aware,Penczynski (2018) andGeorgalos and Hey (2019) are the only published studies that propose a machine learning approach. More on this in Section 4.…”