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Bounded rationality was coined by Herbert A. Simon, where it was proposed as an alternative basis for the mathematical and neoclassical economic modelling of decision-making, as used in economics, political science, and related disciplines.
Herbert Alexander Simon (June 15, 1916 – February 9, 2001) was an American scholar whose work influenced the fields of computer science, economics, and cognitive psychology. His primary research interest was decision-making within organizations and he is best known for the theories of " bounded rationality " and " satisficing ".
Simon formulated the concept within a novel approach to rationality, which posits that rational choice theory is an unrealistic description of human decision processes and calls for psychological realism. He referred to this approach as bounded rationality.
Administrative Behavior: a Study of Decision-Making Processes in Administrative Organization is a book written by Herbert A. Simon (1916–2001). It asserts that "decision-making is the heart of administration, and that the vocabulary of administrative theory must be derived from the logic and psychology of human choice", and it attempts to describe administrative organizations "in a way that ...
To present a more realistic alternative to the economic rationality model, Herbert Simon proposed an alternative model. He felt that management decision-making behavior could be described as follows:
Bounded rationality was developed by Herbert A. Simon, along with James March, Richard Cyert and Oliver Williamson. Rational expectations were developed by John F. Muth and later translated into macroeconomic theory by Robert Lucas Jr., Thomas Sargent, Leonard Rapping, and others. [2]
I.e., some groups may settle for "good enough" achievements rather than striving for the best possible outcome. This came from a concept known as bounded rationality, which was developed by Herbert Simon. [4] Bounded rationality means prudent behaviour under a given set of circumstances. [9]
Herbert A. Simon, winner of the 1975 Turing award, the 1978 Nobel Prize in economics, and the 1988 John von Neumann Theory Prize. Bounded rationality is the idea that when individuals make decisions, their rationality is limited by the tractability of the decision problem, their cognitive limitations and the time available. Herbert A. Simon ...