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Bounded rationality - Wikipedia, the free encyclopedia

Some models of human behavior in the social sciences assume that humans can be reasonably approximated or described as "rational" entities (see for example rational choice theory). Many economics models assume that people are hyperrational, and would never do anything to violate their preferences. The concept of bounded rationality revises this assumption to account for the fact that perfectly rational decisions are often not feasible in practice due to the finite computational resources available for making them.

The term is thought to have been coined by Herbert Simon. In Models of My Life, Herbert Simon points out that most people are only partly rational, and are in fact emotional/irrational in the remaining part of their actions. In another work, he states "boundedly rational agents experience limits in formulating and solving complex problems and in processing (receiving, storing, retrieving, transmitting) information" (Williamson, p. 553, citing Simon). Simon describes a number of dimensions along which "classical" models of rationality can be made somewhat more realistic, while sticking within the vein of fairly rigorous formalization.

You can ask, though, whether it isn't the 'fairly rigorous formalization' that is the problem.
by nanne (zwaerdenmaecker@gmail.com) on Sat Aug 23rd, 2008 at 07:04:56 AM EST
... proximate source of the most egregious biases.

When "analytical rigor" has a higher priority than the persuasiveness of the causal and effect explanation, then  no matter how many "dimensions" are introduced that permit more realism, the initial point of departure for each analysis is compatibility with the analytical toolkit, and the marginalist reasoning itself will hold that the result of the trade off between analytical tractability will be less success in offering cause and effect explanations than if persuasiveness in offering cause and effect explanations were the starting point.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sat Aug 23rd, 2008 at 01:01:42 PM EST
[ Parent ]


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