Bounded rationality Quotes

“Rationality”

“Decision-making”

“The term “bounded rationality” was coined in the 1950s by Herbert A. Simon.”

“Wikipedia: Bounded rationality”

“All that most economists know about Herbert Simon is that he wrote about bounded rationality and organizational behavior.”

“One is forced to assume that ordinary people have the computational capabilities and statistical software of econometricians.”

“Mapping Bounded Rationality by Daniel Kahneman”

“The problem can be approached initially either by inquiring into the properties of the choosing organism, or by inquiring into the environment of choice.”

“… I shall assume that the concept of ‘economic man’(...) is in need of fairly drastic revision, and shall put forth some suggestions as to the direction the revision might take.”

“Simon’s conventionalism leads to a decision paradigm, according to which understanding problems of coordination is impossible without taking into consideration individual cognitive limits and social representations of reality.”

“If (...) we accept the proposition that both the knowledge and the computational power of the decision maker are severely limited, then we must distinguish between the real world and the actor’s perception of it and reasoning about it.”

“Models of bounded rationality describe how a judgement or decision is reached (that is, the heuristic processes or proximal mechanisms) rather than merely the outcome of the decision, and they describe the class of environments in which these heuristics will succeed or fail.”

“Broadly stated, the task is to replace the global rationality of economic man with a kind of rational behavior that is compatible with the access to information and the computational capacities that are actually possessed by organisms, including man, in the kinds of environments in which such organisms exist.”

“The principle of bounded rationality [is] the capacity of the human mind for formulating and solving complex problems is very small compared with the size of the problems whose solution is required for objectively rational behavior in the real world — or even for a reasonable approximation to such objective rationality.”

“Two types of conventions [ in organizational settings] may be distinguished here: (a) conventional rules of behavior demonstrated in the classroom mental experience (first part of the story) and (b) conventional representation of the world revealed in the following discussions with ‘‘experienced” friends (second part).”

“Information impactedness is a derivative condition that arises mainly because of uncertainty and opportunism, though bounded rationality is involved as well. It exists when true underlying circumstances relevant to the transaction, or related set of transactions, are known to one or more parties but cannot be costlessly discerned by or displayed for others.”

“Both from these scanty data and from an examination of the postulates of the economic models it appears probable that, however adaptive the behavior of organisms in learning and choice situations, this adaptiveness falls far short of the ideal of ‘maximizing’ postulated in economic theory. Evidently, organisms adapt well enough to‘satisfice’; theydo not, in general, ‘optimize’.”

“In the literature of problem solving, the topic I am now taking up is called "problem representation." In the past 30 years, a great deal has been learned about how people solve problems by searching selectively through a problem space defined by a particular problem representation. Much less has been learned about how people acquire a representation for dealing with a new problem—one they haven't previously encountered.”

“Bounded rationality means that people make quite reasonable decisions based on the information they have. But they don't have perfect information, especially about more distant parts of the system. [...] We don't even interpret perfectly the imperfect information that we do have, say behavioral scientists. [...] Which is to say, we don't even make decisions that optimize our own individual good, much less the good of the system as a whole.”

“In Administrative Behavior, bounded rationality is largely characterized as a residual category — rationality is bounded when it falls short of omniscience. And the failures of omniscience are largely failures of knowing all the alternatives, uncertainty about relevant exogenous events, and inability to calculate consequences. There was needed a more positive and formal characterization of the mechanisms of choice under conditions of bounded rationality... Two concepts are central to the characterization: search and satisficing.”