Hayek's theory on complexity and knowledge: dichotomies, levels of analysis, and bounded rationality

Abstract

Hayek maintains that models of complexity must consider two closely interrelated factors: the large number of variables and the connections among them. These two conditions, which define complex phenomena, exhibit a different logical dimension. The former (the ‘large number of variables’) describes complexity in quantitative (numerical) terms; the latter provides a view of complex phenomena in logical-relational terms, and it is evoked to explain the emergent properties of the whole. Despite the close relation between these concepts, the first notion essentially prevails over the latter, delineating a distinctive configuration of the theory. This perspective also emerges when Hayek defines ‘dispersed’ and ‘inarticulate’ knowledge, and introduces the concept of the ‘explanations of the principles’. Finally, the notion of level of analysis is discussed in order to interpret Hayek's two concepts which define complexity.