Adaptive Behavior and Economic Theory

Adaptive Behavior and Economic Theory


The primary task of economic theory is to elucidate the economic prospects of a decentralized market segment. Economic theory is occupied with the interaction process of various individual agents in a decentralized economy.

Various economic systems are classified as complex adaptive and decentralized entities that are made up of networks of interacting agents. Viable economic systems also exhibit dynamic aggregate behaviors that emanate from the activities of individual agents that comprise the financial system.

The behavior is describable without any form of detailed knowledge of agents. At the same time, an agent in economic systems is adaptive if he or she satisfies the environmental demands within the environment such as utility, pay off, and performance. Most important is the fact that the behavior of the agent should be able to increase in value over time.

A complex economic system should also comprise of complex adaptive agents, interconnected through the discords of the environment in which they live. It should be understood that the complex web of adaptive systems operate within the scope of global optimum whereby they exhibit numerous levels of interaction and aggregation across different economic levels. Each economic level, in this case, has its characteristic behavior and time scale.

As a result, each economic level can be clearly described in regards to local niches and market segments that can be explicated by appropriate adaptations. The increasing rates of technological advancements and improvement strategies offer viable adaptive systems where different individual agents can fit and expand their business activities.

Moreover, a complex theory of adaptive systems promotes the development of flexible, well-defined models that exhibit emergent behavior in a business environment. Most economists will agree that economics theory and its scientific discords began with Adam Smith. Smith’s intent was to ascertain the systematic analysis of the behavior of individual agents in using personal interests to motivate their actions within the context of competition. Competition in business is a complex entity that significantly determines the behavior of entrepreneurs.

According to the Porter’s five economic strategies, industry rivalry may prompt business people to engage in illicit business activities in a bid to make profits. It is, therefore, arguable that most entrepreneurs are more engrossed in profit making as opposed to meeting the needs of the customers.

Being profit oriented has instigated various aspects such as unfair and unhealthy business practices. A clear evidence of the adaptive behavior in a competitive market segment is the current shake out in the fast food industry. Today, the fast food industry is expanding and taking new shapes with each passing day. As a result, many people have invested in the businesses.

The competition is stiff and for some of the businesses to thrive amidst the competition, they have to utilize unhealthy competitive strategies. Many businesses are being quickly eliminated from the market. Therefore, only the large scale business premises such as the MacDonald’s can survive in the industry. Accordingly, more than 100 business premises in the fast food industry have been closed over the last six months in the United States. Thus, there is a tendency for the individual agents to adapt to certain behaviors so as to remain competitive in the market segment.

The relationship between adaptive behaviors and economic is based on the fact that the ultimate motive taken by the individual agent relies on the desire of the agent to achieve specific financial goals. The aspect of the economic theory is based on the fact that factors in any business environment gain motivation through personal benefits and the desire to acquire as much profit as possibility. In any economy, the desire of the investor is to obtain profitability.

The amount of the benefits garnered may vary depending on the strategies that the entrepreneur puts in place. Here, agents come up with preferences and actions that they believe would help them collect as much profit as possible. The underlying assumption in economic theory is that a consumer usually wants to purchase a specified unit of a commodity.

As such, the role of the suppliers is to avail that commodity to the convenience of the customer. In a bid to ensure that the products are availed to the consumer, competition emerges among the suppliers. This competition becomes stiff if the market is oligopolistic. In such market segments, only the accomplished and large businesses will ensure survival.

The price of the commodities also determines the flow of customs to the firm. This assertion elucidates why today’s businesses selling counterfeit products get more customers than the manufacturers of original products. The production of counterfeit goods is as a result of the desire to fit in a market segment due to industry rivalry.

Thus, the adaptive behaviors may not always be ethical. Without the right legal measures, the markets will always remain folded with illegal goods and unethical strategies to garner profits from the business activities. In a nutshell, the relationship between adaptive behaviors of the individual agents depends highly on the economy of particular market segments.

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