TOWARD AN "ADAPTIVE THEORY OF LOCATION"

(http://faculty.washington.edu/krumme/450/adaptive.html)

1. SHORTCOMINGS OF CLASSICAL AND NEOCLASSICAL LOCATION THEORIES

2. NECESSARY OR DESIRABLE COMPONENTS or characteristics of an adaptive approach

1. non-static; different roles of time: environmental change, investments
2. a less perfectionist definition of "optimum"; "satisficing"; trial & error.
3. recognition of complexity of environments [Emery&Trist; Milliken]
4. uncertainty and uncertainty responses [Dean & Carroll]
5. learning component and forgetting (individual & organizational amnesia); (and other types of endogenous (capital) accumulation & dissipation)

3. SUGGESTED "BENCHMARKS" of an Adaptive Approach:

1. Tiebout/Alchian's adaption and adoption ("natural selection argument")

   Argument: "... success (survival) accompanies relative superiority; and second, it does not require proper motivation but may rather be the result of fortuitous circumstances. Among all competitors, those whose particular conditions happen to be the most appropriate of those offered to the economic system for testing and adoption will be "selected" as survivors."(Alchian, p.213)

2. March/Cohen's "Garbage can model"

4. OTHER NEOCLASSICAL TAKE-OFF POINTS:

1. Other "auxiliary defenses" of classical theory
2. Iterative evolutions of Hotelling's or Weber's equilibrium over time
3. Day and Tinney's recursive programming interpretation of land use
4. Smith' "spatial margins" [p.105ff.]; "range of tolerance"
5. Oligopolistic follow-the-leader type of behavior [Rees]
6. Short, medium & long-run: the temporal structure of adjustments

5. BEHAVIORAL, MANAGERIAL AND EVOLUTIONARY PROPOSITIONS

1. Nelson and Winter, Evolutionary Theory of Economic Change, Ch.2
2. "Rules of Thumb"; Standard Operating Procedures; Imitation of Rules
3. Braybrooke & Lindblom's "Failure of the Synoptic Ideal" and "Disjointed Incrementalism". [A Strategy of Decision 1963/1970)
   1. "Information is extremely costly and is not always worth its cost. Hence comprehensive analysis is not always worth its cost" (p.47)
   2. "The synoptic ideal, like the rational-deductive and welfare function methods, is distinguished by its failure to incorporate adaptive features. To expose the poverty of this ideal more fully with respect to adaptive features, we can summarize..." (pp.48ff.):
      The synoptic ideal is not adapted to...
      1. man's limited problem-solving capacities
      2. inadequacy of information
      3. costliness of analysis
      4. failures in constracting a satisfactory evaluative method (whether a rational deductive system, a welfare function, or some other)
      5. closeness of observed relationships between fact and value in policy-making.
      6. openness of the systems of variables with which it contends
      7. analyst's need for strategic sequences of analytical moves
      8. diverse forms in which policy problems actually arise
   3. Disjointed Incrementalism
      • Small changes: (often: "change within structures" [rather than "structural change]) May mean:
        • Change in "unimportant variable"
        • Small change in important variable
   4. Satisficing (alterantive to maximizing behavior)
   5. bounded rationality
   6. multiplicity of goals
   7. sequential attention to goals
   8. feedback-reaction approach to decision making (trial and error)
   9. "standartd operating procedures", use of routines
   10. resitance to change except under duress
   11. coalitions to resolve conflicts
   12. organizational slack to stabilize coalitions
   13. uncertainty avoidance
   14. problem-oriented search
   15. problems are not necessarily preceding attention to solutions
   16. adjustment of objectives to strategy (p.93)

6. CARNEGIE SCHOOL (Simon, Cyert, March, Cohen etc.)

1. The Evolution of the Concept of Rationality (Simon);
   • Limited Rationality of Administrative Man (Simon, 1947) "Actual behavior falls short , in at least three ways, of objective rationality..:
     1. Rationality requires complete knowledge and anticipation of the consequences that will follow on each choice. In fact, knowledge of consequences is always fragmentary
     2. Since the consequences lie in the future imagination must supply the lack of experienced feeling in attaching value to them. But values can be only imperfectly anticipated.
     3. Rationality requires a choice among all possible alternative behaviors. In actual behavior, only a very few of all these possible alternatives ever come to mind." (Simon, 1947, p.81)
   • Intended "Human behavior in organizations is, if not wholly rational, at least in good part intendedly so. .... human behavior is intendedly rational, but only limitedly so.." (Therefore there is room for a genuine theory of organization and administration) (Simon, 1947, xxiiif.)
   • Subjective "A decision is 'subjectively' rational if it maximizes attainment relative to actual knowledge of the subject."( Simon, 1947, p.76)
   • Conscious A decision "is 'consciously' rational to the degree that the adjustment of means to ends is a conscious process (Simon, 1947, p.76)
   • Deliberate A decision is "deliberately' rational to the degree that the adjustment of means to ends has been deliberately brought about (by the individual or by the organization)" (Simon, 1947, p.76)
   • Organizational (Personal) A decision is organizationally (personally) rational if it is oriented to the organization's (individual's) goals. (Simon, 1947, p.77)
   • Bounded Simon's "bounded rationality" refers to the simplified and constrained model of intended rationality which decision makers construct for themselves to deal with complex decision situations. The important constraints are informational and computational limits on rationality by human beings. (Simon, 1955, 1956 & 1957)
   • Procedural "Behavior is procedurally rational when it is the outcome of appropriate deliberations. Its procedural rationality depends on the process that generated it. When psychologists use the term 'rational', it is usually procedural rationalty they have in mind." (H.A.Simon, "From Substantive to Procedural Rationality," in: S.J.Latsis, ed., Methods and Appraisal in Economics. Cambridge Univ.Press 1976, pp.129ff (here: p.131)
2. Simon's "Satisficer" (Herbert A. Simon, Economics Nobel Prize Winner, 1978)
   
3. Cyert and March (Behavioral Theory of the Firm, 1963)
   Organizational goals, expectations, choice; Resolution of conflict, Uncertainty avoidance, Problemistic search [Search is motivated, simple-minded and biased], Organizational learning
   
4. "Organizational Anarchy": "Acting First & Thinking Later" Problems, Solutions, Choice Opportunities and Participants
   • March/Cohen's "Garbage can model"

7. GEOGRAPHY

1. Active (adaptive) / passive (adoptive) distinction Alchian (1950) and Tiebout (1957): Adaption and Adoption [Charles Tiebout, "Location Theory, Empirical evidence and Economic Evolution," (1957)] Two views:
   1. Firms (plants) seek out the proper or optimum location and by means of economic analysis find that location. Firms look at their locational economic environment and "adapt" to this environment.
   2. In Alchian's view, firms, because of uncertainty are unable to know their environment. "In the extreme, firms act in a 'random' manner and the economic system 'adopts' those which fit the economic environment."
2. Pred's Behavioral Matrix (Behaviour and Location, Lund 1967):
   "Towards perfect knowledge" / "Ability to use information"
3. Wolpert's "Decision-Processes in a Spatial Context": Analysis of farming in Sweden: differences in
   1. access to information and
   2. utility functions
4. Bayesian interpretations and models of adaptation and learning; locational "expertness", consultants [Bayesian Analysis]
5. Time-Geographic Views of the Corporation: Toward a Theory of Locational 'Procrastination' [Hamilton]

8. EMPIRICAL EVIDENCE

1. Introduction: "Personal reasons" in location decision making
2. Check lists; interregional competition for industries, subsidies
3. Location Surveys: difficulty of interpreting interviews & questionnaires; (specific) location FACTORS vs.(general) environmental CONDITIONS
4. Case Studies & Content Analysis (e.g. General Motors)
5. Statistical analysis (Schmenner, Huber & Cook)
6. How the consultants do it: Kepner & Tregoe's Decision Stages and "Musts and Wants"
   Mills, "A Multi-Phase Approach.."
7. Other evidence: in-situ adjustments after move (Townroe)

9. Towards a better Understanding of Locational Flexibility

Internet Sites:

Microsoft Group on Decision Theory and Adaptive Systems

A Survey of Cognitive and Agent Architectures

Literature:

Conlisk, John, "Why Bounded Rationality?" Journ. of Econ. Lit., 34(2), June 1996, pp.669-700. (Review paper)