Friday, July 15, 2011

Defining Uncertainty, Difficulty, and Complexity

A useful taxonomy from Scott E. Page's Uncertainty, Difficulty, and Complexity (Journal of Theoretical Politics 20(2): 115–149 DOI: 10.1177/0951629807085815)
My point is that uncertainty differs from difficulty and complexity and that they too matter. ... (U)ncertainty refers to the absence of information about some relevant variable or what some call the state of the world – tomorrow’s weather, to give one example, is uncertain. Difficulty refers to problems that have many interacting variables. Developing a workable form of fusion is difficult as is designing an office building or writing a piece of legislation. Difficult problems have many possible solutions and no obvious best one a priori. When faced with a difficult problem, most problem solvers prove incapable of finding the optimum. They must rely on perspectives and heuristics (Page, 2007). Complexity in turn differs from difficulty. Complexity refers to dynamic environments that contain multiple actors who interact with one another. The response to a natural disaster like a hurricane creates a complex web of interactions whose outcomes are unpredictable. Complex environments cannot be solved in any sense. At best, the complexity can be harnessed (Axelrod and Cohen, 2000).

The relevance of the definitions is outlined in the abstract below:
In this article I clarify the often muddled distinctions between uncertainty, difficulty, and complexity and show that all three can enhance our understanding of institutional performance and design. To cope with uncertainty, institutions align incentives for information revelation; to handle difficult problems, institutions create incentives for diverse problem-solving approaches; and to harness complexity, institutions adjust selection criteria, rates of variation, and the level of connectedness. The distinction between complex systems and equilibrium systems also necessitates a discussion of the differences between the existence, stability, and attainment of equilibria and why, despite often being neglected, the latter two concepts are important to our understanding of institutions.

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