Human cognitive limits make simplifying concepts and calculating devices constitutive of complex markets.

Evidence

Part of the significance of the performativity of economics arises from the fact that individual human beings tend to have quite limited powers of memory, information-processing, and calculation.” Those limitations explain the centrality especially in complex markets of simplifying concepts (e.g., “implied volatility”) and of material means of calculation (e.g., Black’s sheets and the Chicago Board Options Exchange’s Autoquote system). — Donald MacKenzie, An Engine, Not a Camera, 1195

Categorization

• DEFINE: Establishes the distributed-cognition argument: models and devices are not auxiliary but load-bearing because humans have bounded rationality.
• XREF: Connects to behavioral finance and Simon’s bounded rationality; also to Hutchins’s distributed cognition framework cited in the passage. — connects to: Economics simplifies and disembeds market participants to become applicable. — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 189; Economics operates through material devices and algorithms as much as beliefs. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 95; Economic models are deliberately simplified representations enabling mathematical reasoning. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 40 (+8 more)

Broader Connections

• Market mechanisms sometimes amplify rather than correct human cognitive limitations #expands (0.85) — Donald MacKenzie, An Engine, Not a Camera, 1207
• Markets act as cognitive prostheses enabling outcomes beyond individual rationality #corroborates (0.85) — Donald MacKenzie, An Engine, Not a Camera, 1206
• Systems are rational by reducing complexity without overburdening the individual #corroborates (0.85) — Niklas Luhmann, Trust and Power, 324
• Economic performativity rests on human cognitive limits and mutual susceptibility #exemplifies (0.80) — Donald MacKenzie, An Engine, Not a Camera, 1197
• Administered rationality works by reducing qualitative differences to commensurable equivalents. #exemplifies (0.80) — Theodor W. Adorno, The Culture Industry, 152
• Human rationality is bounded by memory and computational limits and often violates rational maxims #qualifies (0.75) — John T. Jost and Jim Sidanius, Political Psychology, 2408
• The culture industry does the consumer’s cognitive schematizing for him #exemplifies (0.75) — Theodor W. Adorno, Max Horkheimer, Dialectic of Enlightenment, 97
• Simplification is the essence and aim of speculative teleology. #corroborates (0.72)