Daniel Beunza (organizer)                                                             Distributed Calculation: Mechanisms of Arbitrage in a World of Uncertainty    

David Stark (organizer)                                                         Entrepreneurship as the Exploitation of Uncertainty   

Adam Brandenburger                                                                 Uncertainty in Games                                                                          

Emanuel Derman                                                                         Modeling and its Discontents                                                                 

Although the language of financial theory is  inspired by and closely resembles the language of mathematics and physics, the similarities are deceptive. Models in physics and models in finance are used in very different ways. This talk compares modeling styles in the physics and finance and discusses the appropriate way to use valuation models in financial markets.

Olivier Favereau                                                                                    Conventions as a Laboratory: When the Opposite of Uncertainty is not Certainty But Coordination

Raghu Garud                                                                        Frame-Making: Mechanisms of Valuation under Uncertainty                      

The academic debate on valuation is structured around two competing approaches. One argues that the value of securities is intrinsic and calculated with information available to the actors. The other contends that value is social and that it is determined by a process of imitation. Both approaches fail to address situations of Knightian uncertainty, when the future is unknown. This article examines the challenge of valuation under Knightian uncertainty. It conducts a grounded-theory content analysis of the reports written by leading securities analysts on Amazon.com during 1998-2000. It finds that valuation is an interpretive process that involves the creation and use of “calculative frames.” These comprise categories, analogies and key metrics. Calculative frames mediate the incorporation of new information into company valuations and generate controversies as actors with different frames challenge one another.

Anna Grandori                                                                            Unbounding Bounded Rationality: A Heuristic Model of Rational Discovery      

Few attempts have been made at modeling economic decision making as exploratory, innovative, design-oriented and yet rational behavior. This paper builds on the available earlier works in this direction in administrative science, economics and cognitive psychology, connects them to relevant classic and recent works in the philosophy of science and knowledge, and shows how the repertory of ‘behavioral heuristics’ typically contemplated in the bounded rationality tradition can be enriched by an array of ‘rational heuristics’: methods for the logically sound discovery and invention of economic actions, options, and objectives. The specification of this form of heuristic rationality should contribute in reducing the divide between behavioral and economic approaches to decision making and in sustaining innovation and the growth of knowledge.  It is further shown that some important features of economic organization under uncertainty would  parsimoniously and naturally follow from the assumption that  decision makers in the course of being  heuristic (employing methods for discovery) can also be rational (employing logically correct methods).

Harrison Hong                                                                         Disagreement and the Stock Market                                                      

Sarah Kaplan                                                                             Projecting the Future: The Temporality of Strategy-Making       

We draw on an ethnographic study of a communications technology firm facing the telecoms crash of the early 2000s to explain how managers project the future in their everyday strategy-making practices. We show that strategy making is crucially shaped by present contingencies, past routines, and future imaginings, and identify four main bridging practices that managers use to navigate the conflicting influences of the past, present and future. We find that managers’ different engagements with these bridging practices over time enact a set of strategic trajectories that promote organizational continuity or change. A temporal view of strategy making thus helps to explain how managers’ everyday strategy practices shape the organization’s future over time and sheds light on the ways in which path dependence and path creation are enacted over time.   

Laurent Thevenot                                                             Incommensurable Information and Uncommon Knowledge: Cognitive Formats in Coordinating Action                                                                     

Paying attention to the "degree of knowledge rather than to its presence
or absence in toto", Frank Knight has developed his well known opposition
between "measurable risk" and "unmeasurable uncertainty" which opened new avenues of research by: #1 differentiating types of knowledge formation in relation to decision making; #2 noting that the first knowledge formation
needs investments for grouping or "consolidating" instances as a basis for
calculation.My contribution will introduce a further extension which elaborates on the relation between information formats and the various ways actions are coordinated. It will be two-steps. First, I shall situate the "measurable risk" type of knowledge within a range of commonly shared conventional formats, each of them being appropriate for large-scale coordination although being relatively incommensurable with the other since it relies on a different order of worth. Second, I shall consider the case of
knowledge which is not only partial since incomplete or incompletely
shared, but which cannot be conventionally made common. Rather than
opposing private to public knowledge, I shall differentiate cognitive
formats which are unequally prepared to be made common, drawing upon the distinction of a plurality of regimes of engagement with the world.
To illustrate the benefits of the analytical framework, I will refer to
the concomitant although partly contradictory twofold extension of
marketization and standardization.

Douglas North                                                                             Uncertainty in a Non-Ergodic World                                                             

Joe Porac                                                                             Organizational Actors as "Small" or "Large" Brains? Assumptions about Uncertainty Really Matter                                                                 

Richard Langlois has coined the term "structural" vs. "parametric" uncertainty. The former is more akin to "Knightian uncertainty" or what some post-Keynesian economists have called "fundamental uncertainty": the fundamental "unknowability" of an open-ended and non-ergodic world. The latter type of uncertainty refers to the inability to predict events within a bounded space of institutionalized concepts and understandings that frame a set of probabilistic outcomes. The point of this presentation is that how we approach understanding organizations very much depends on which type of uncertainty we admit into our theories.  For example, Herbert Simon suggested that human rationality was constrained by a "scissors" formed by the limits of the human brain and the overwhelming complexity of the environment. His notion of bounded rationality is an outcropping of this sort of  argument. But the concept is based on a conception of uncertainty as "parametric uncertainty:" not being able to predict and fully understand outcomes in an already defined reality. If one starts from structural uncertainty, one gets to a very different view of human cognitive ability:  namely, that it is creative and has the major role of "defining" and stabilizing a conception of reality, not simply predicting events within a reality that is already defined.  In fact, a major impetus to innovation and breaking from the past is the human ability to define alternative conceptions of reality, thereby shattering the "bounds of our existing rationality" with new ideas.  Accepting this argument essentially is a question of whether one believes that organizational actors are "small brains" faced with overwhelming complexity that they can never fully understand, or "large brains" forming reality by imposing and acting upon creative definitions
of the world.

Nassim Taleb                                                                                      Ludic fallacy: Pre-asymptotics and Inverse Problems                     

Discussants                                                                                     Bruce Kogut, Yuval Millo, Fiona Murria