Narratives as a coordinating device for reversing regional disequilibrium

Substantial differences in productivity, accompanied by growing social and political discontent, have widened across UK regions in the last 40 years, creating a dysfunctional spatial equilibrium; a coordination failure that has so far proved resistant to change. In this paper, we link such persistent regional disequilibria with current socio-psychological theories about the role of narrative in decision-making under radical uncertainty to explore how and why ideas held collectively within a social network can become the coordinating device for a range of decisions within networked communities that have extra-market effects (externalities), analogous to the role that prices play within markets. Drawing on findings from a pilot interview study in two UK regions, we show the potential for local leadership to use well-constructed narratives to coordinate fragmented agents to cooperate on a common purpose and more generally propose a framework to understand how low-income equilibria become stable but might be re-set. In this way we bring new insights into the need for an expanded economic theory of knowledge applicable to expectation and preference formation in conditions of radical uncertainty.

Automated summary

This paper explores the impact of narrative on decision-making within social networks, using the example of regional productivity disparities in the UK. It suggests that well-constructed narratives by local leaders can coordinate fragmented agents to cooperate towards a common goal and proposes a framework for resetting low-income equilibria, offering new insights into expectation and preference formation under radical uncertainty.