The Suntory and Toyota International Centres for Economics and Related Disciplines

The Logic of Surprise

Author(s): G. L. S. Shackle
Source: Economica, New Series, Vol. 20, No. 78 (May, 1953), pp. 112-117
Published by: Blackwell Publishing on behalf of The London School of Economics and Political
Science and The Suntory and Toyota International Centres for Economics and Related
Disciplines
Stable URL: http://www.jstor.org/stable/2550836
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[MAY
The Logic of Surprise
By G. L. S. SHACKLE
A SURPRISE IS EXPECTED ". These words on a newspaper placard
carry at first sight the suggestion of a contradiction in terms. Surprise
is what we feel when an expectation has gone wrong, has proved in the
event to have been ill-founded and false. How then can one expect
to be surprised ? One possible explanation is trivial: the expectation
was in the mind of person A and concerned a feeling to be experienced
by person B. But let us ask whether in any sense a man can expect that
he himself will on some specific occasion experience surprise. On broad
grounds of common experience and common sense we may well be
inclined to start by saying: Well, we all know that there is such a thing
as a feeling of surprise, we have all experienced it at one time and
another, and it would be absurd to say to oneself at any stage of life:
" I shall never again be surprised ". 'So at least in a vague and general
sense we do assume, and accept the fact, that life has surprises in store
for us, though whether this is more than the inescapable result of cold
reflection, whether it really represents a lively and insistent conviction,
is perhaps more doubtful. But plainly there is here a paradox: on
the one hand there is the fact that each one of us feels sure that he
will in the future experience surprise, on the other hand there is the
fact that surprise is what we feel when that has occurred which we did
not expect. It may be asked: Is the indefiniteness of the future occasion,
its being quite unspecified as to date or circumstances, an essential
condition for the possibility of entertaining a belief that we shall feel
surprise ? No: it is, I think, possible to expect to be surprised by what
will happen on an occasion which is in some sense particularised. The
paradox is a close-knit and definite one. To resolve it we need first
some definitions.
There are two things that I think we can reasonably mean when we
say that a person expects such and such a state of affairs or such and
such an event. The state of affairs being specified, and its location in
future history being stated by naming a calendar date or by describing
an organic sequence of situations of which the particular state of
affairs is the end-product,
or by naming some, so to speak, pigeon-
hole in future history such as ' the next General Election ' or '
the
next debate in the Commons on economic affairs', we can mean, when
we say that a given person ' expects
'
this state of affairs to arise at
the named
'
cue ', either that he attaches zero potential surprise to
this as well as to many other mutually exclusive hypotheses,
or else
that he attaches some degree greater than zero of potential surprise
112
1953]
THE LOGIC OF SURPRISE 113
to all hypotheses other than this one. Even with the first, and weaker,
of these two meanings our paradox appears.
In conversation we use such words as ' surprising' and ' unexpected'
with little heed to fine shades of meaning or to precision and con-
sistency. But for my present theme I must recall a distinction which
I suggested some years ago1 and which is not, I should maintain, a fine
or subtle difference of meaning but a plain and essential one. By a
counter-expected event I mean an event which has figured as a member
of the set of hypotheses provisionally entertained by some individual
about the outcome of some course of action or some ' experiment',
or about the answer to some question, and which has been carefully
examined by him in that context and as a consequence has been assigned
a high degree of potential surprise. A counter-expected hypothesis,
that is to say, is in rough language a hypothesis that has been looked
at and rejected. In contrast with this I define an unexpected event as
one which has never been formulated in the individual's imagination,
which has never entered his mind or been in any way envisaged. But
here we must be careful. Evidently the question whether an event
has been thought of or not may depend on the degree of exactness and
detail in which it is specified. If I lose my latch-key, the possibility
that I shall find it 'at home' will no doubt be in my mind; but the
idea that it could have found its way into my three-year-old daughter's
money-box may have escaped me in that explicit form. Yet this also
answers to the description of finding the key
' at home'.
These two categories, counter-expected and unexpected situations
or events, are exhaustive in the sense that under one or other of these
heads can be included every kind of event or state of affairs which
does not conform fully and precisely to an imagined situation or event
pre-existing in the individual's mind and carrying zero potential surprise.
Now to say that someone expects to be surprised by a counter-expected
event involves a logical contradiction. Some precisely specified future
event is imagined, and some degree, zero or greater than zero, of poten-
tial surprise is attached to the hypothesis of its occurrence. To expect
this event means, at any rate, to assign to it zero potential surprise;
but in that case this zero degree of surprise is what is expected to be
experienced if this event occurs. Thus it follows that our paradox can
only be resolved by supposing that one can expect to be surprised by an
unexpected event. In what circumstances will this be possible ? This
latter question is really
two questions:
(a) What circumstances expose a man to the occurrence of an
unexpected event ?
(b) In what circumstances will he be aware of this exposure ?
Here we are not thinking, of course, of events in general, but of the
outcome of specified antecedents, the result of an '
experiment' defined
1
"The Expectational Dynamics
of the Individual ", Economica, May,
1943. See
also Expectation in Economics, Cambridge University Press, 1949, pp. 73, 74, 76.
114 ECONOMICA [MAY
in some respects as to its character and particular occasion. All of us,
needless to say, are at all times exposed to unexpected occurrences in
general. Question (a) asks in what circumstances, when a man has
been looking at some particular pigeon-hole of future history, what
actually happens can have altogether escaped his survey of possibilities,
so that the degree of potential surprise he assigned to it was neither
zero nor greater than zero, but was non-existent, a sheer blank. If
the question to which the event will provide the answer is a very simple
one, so that the answer will be, for example, simply Yes or No, or a
single number, then it is plainly almost impossible that the individual
should fail to survey, at least in principle and by implication, all out-
comes which are logically conceivable, so that no loophole will be
left for anything to occur which he has not thought of and to which he
has not assigned some degree of potential surprise. When the question
is a Yes or No question or a ' one-dimensional' question, there can
scarcely be any possibility of an occurrence which is unexpected in
my special sense. It is when the answer must consist in a catalogue
of a great many particulars and details that the very existence of some
of the individual characteristics, or the possibility of certain combina-
tions of them, may be overlooked by the individual when he considers
the matter in advance. Complexity of the event is therefore, I think,
a circumstance which must be present if the individual is to be in fact
exposed to the occurrence of an unexpected event. Thus, for example,
the size of a dividend could not be unexpected in my sense, though it
could of course be counter-expected. But a Budget, or some of its
proposals, could be unexpected, because the variety of possible com-
binations of measures is so great. We come, then, to question (b).
By an exhaustive set of rival hypotheses about some question I
mean a set of headings under one or other of which the individual feels
certain that he will be able to place the true answer to the question
when it shall become known. Some at least of these headings will
ordinarily be stated with some precision and fulness of detail, but the
individual may not feel certain that the true answer will be found
amongst these accurately stated hypotheses. If so, in order to make
the set of hypotheses exhaustive he will have to include a residual
hypothesis, which will be simply a recognition of the non-exhaustiveness
of his list of precisely stated hypotheses. Since, if the question is
meaningful, it must necessarily have some true answer, the individual
will acknowledge that one at least of his exhaustive set of rival hypo-
theses must be assigned zero potential surprise. But there is nothing
in general which compels him to attach zero potential surprise to any
of his fully stated hypotheses: every one of these may carry potential
surprise greater than zero, and the zero degree be attached only to the
residual hypothesis. If so, there is no logical contradiction in his
believing it possible that when the true answer shall become known,
its character in detail will surprise him. More precisely we can say
that no logical contradiction is involved in the individual's assigning
1953] THE LOGIC OF SURPRISE 115
zero potential surprise simultaneously to each of the ideas (1) that
the true answer when it shall become known will fall under his
residual heading, and (2) that its character in detail will cause
him surprise.
By way of illustration, suppose that a 19th century physicist had been
shown an electronic digital computer performing in a matter of minutes
calculations that no human computer could execute in a lifetime.
Unable to conceive how the miracle was wrought, yet convinced that
the apparently impossible was in fact being done, he might well have
attached potential surprise greater than zero to any conjectured, but
plainly unsatisfactory, explanations that had occurred to him, and so
have been compelled to reserve zero potential surprise for a residual
hypothesis. And he might well have admitted to himself that the true
explanation when it should be revealed was almost bound to surprise
him.
It is evident that the existence, amongst his exhaustive set of rival
hypotheses, of a residual hypothesis is a necessary condition of his
being able to attach zero potential surprise to the idea that the eventual
true answer will surprise him. For if all the hypotheses which together
compose the exhaustive set were each fully specified in detail, he would,
by the meaning of the words, not expect to be surprised by any one
of those which he expected to occur. But is the existence, in his ex-
haustive set, of a residual hypothesis a sufficient condition for him
to '
expect to be surprised
' ? I think the very fact that he has been
baffled in his attempt to formulate in detail an exhaustive set of rival
hypotheses indicates that he will necessarily be surprised by the truth
which resolves this bafflement: anything not capable of surprising him
would have occurred to him. If we say that the existence of a residual
hypothesis is a sufficient (as well as a necessary) condition for the
individual to be able without logical contradiction to '
expect to be
surprised
'
by the true answer, we are giving to the word '
expect
'
the stronger of the two meanings mentioned above. For we are saying
that the individual will attach potential surprise greater than zero to
the idea that the true answer, when it shall become known, will not
surprise him; we are making the word
'
expect' mean that the in-
dividual has some positive degree of confidence in the idea that he will
be surprised.
The argument to this point may be summarised thus: an actual
experience will cause surprise when an imperfect image of it has been
formed in advance; and the imperfectness can consist either in some
wrong characteristics or details being specified in place of right ones,
or in blanks having been left in the picture, that is, it can consist in
characteristics or details which in fact belong to the experience having
been omitted altogether; or again we can say, in the experience having
'
dimensions 'beyond the list of those which the individual could specify
in advance. If the existence of these blanks, and the individual's
inability to fill them in, has been recognised by him in advance, and if
116 ECONOMICA [MAY
he also recognises that their existence exposes him at least to the possi-
bility of being surprised when the actual event fills them in, he can be
said to ' expect to be surprised '. For he will then attach zero potential
surprise to the hypothesis that the filling of the blanks will, by its manner
or matter, not by its occurrence, surprise him; and to attach zero
potential surprise to a hypothetical future event is one thing that we
can mean by ' to expect it'.
Our argument regarding the possibility of ' expecting to be surprised'
has had as one of its central ideas the concept of residual hypothesis.
The part that this idea can play in the analysis of real situations may
be illustrated in conclusion of this note. We have seen that the in-
dividual will only be driven back on a residual hypothesis when the
question: What will be the outcome of this course of action ? presents
itself to him in a rather complex form, calling for an intricate schedule
of information rather than a single number or a simple Yes or No.
But it may be that this complicated kind of answer is going to be treated
as a means to a simpler kind, which will sum up in some values of a
single variable the happy or unhappy possibilities implied by the
complex answer. The values of this variable corresponding to different
hypothetical answers of the complex kind, each associated by the
individual with some degree of potential surprise, will constitute a set
from which he can select two focus outcomes which, when standardised,
he can use as co-ordinates to plot a point, representing the course of
action in question, on his gambler indifference map. Now it seems
evident that the only way in which a residual hypothesis concerning the
complex type of question can be '
summarised
'
by means of a single
variable is by two very widely separated values' of that variable, one
of them representing a highly desirable and the other a highly undesir-
able outcome. If two such values select themselves as the focus values
of a course of action concerning whose detailed outcome a residual
hypothesis is entertained, the point representing this course will lie far
from the origin of the gambler indifference map and, if losses are
measured on its horizontal axis, far towards the right where focus
losses approach the maximum possible size represented by the in-
dividual's whole fortune. Now there is reason to suppose that the
slopes of the gambler indifference curves on such a map become steeper
towards the right. Thus a point whose location is determined by a
residual hypothesis is very likely to lie below the origin indifference
curve, that is, the gambler indifference curve on which all points are
esteemed by the individual as neither more nor less desirable than an
assurance of neither gain
nor
loss, a situation which, in the context of
gains or losses measured in money, he can attain by simply keeping his
whole fortune in the form of a bank-balance. However, if only some
of his possible courses of action have a residual hypothesis, does the
conclusion we have just reached have any practical bearing ?
'Their separation can of course only be meaningfully described as
'
wide
' in
relation to a particular context.
1953] THE LOGIC OF SURPRISE 117
The state of mind in which the individual can only render exhaustive
his set of hypotheses concerning some one or more questions or courses
of action, by including in each such set a residual hypothesis, can arise
in two ways. The feeling of unplumbed ignorance or lost bearings can
be concerned with the situation of which some particular actions of the
individual would be the 'proximate cause'. Or it can be concerned
with the framework of events which will happen ' in any case ', the
things which are altogether outside his control, such as the weather
or the political situation. In the latter case it may well happen that
not one of the more adventurous of the courses of action open to him
escapes the need of a residual hypothesis to render exhaustive his set of
rival hypotheses concerning its outcome. If he attaches low or zero
potential surprise to these residual hypotheses, all the points represent-
ing active and ' positive' policies may lie below the origin indifference
curve, and only those representing passive policies, typically that of
keeping his fortune in cash, may lie on or above it. Thus we should
expect that when the news seems to provide internally inconsistent or
confficting evidence about the policies or intentions of powerful persons,
or concerning the degree of knowledge they possess, or is for any
reason especially difficult to interpret, the consequence would be to
inhibit some kinds of business activity: not because the news was
regarded as bad from the point of those engaged in this activity (often
they are divided into two camps with opposing momentary interests,
like the Stock Exchange bulls and bears) but because it is unintelligible.
And this we actually observe to happen.
University of Liverpool.