The mountain of experience: how people learn in a complex, evolving environment

Understanding how individuals learn is of great importance to economists to understand economic phenomena as well as their own position in society. The idea that holds that people hold those views that best suit their own interest is untenable. Bayesian views on learning also miss an important point – including the Denzau and North version of Bayesian learning they call a punctuated equilibria view. The important point is that information needs to be interpreted, given meaning. What meaning people give to the information they receive depends on their experience in the past. Past experience take the form of interrelated rules of conduct. In this paper the whole of these interrelated rules is called “the mountain of experience”. This perspective allows a perception on humans in economics that combines reason, adaptation and volition. Some implications of this perspective for economics are explored.