Herbert A. Simon and the concept of rationality: boundaries and procedures

Abstract

This paper discusses Herbert A. Simon's conception of rationality in two of its principal general definitions: bounded rationality and procedural rationality. It argues that the latter is the one that better synthesizes the author's view about rational behavior and that the former fills mainly a critical function. They are complementarily used by Simon in this sense. In spite of that, it is argued that it is the low degree of specificity of the concept of bounded rationality one of the reasons for its relatively greater success

Economics and Psychology. Perfect Rationality versus Bounded Rationality

“…According to Simon a search for procedural rationality is the search for computational efficiency, and a theory of procedural rationality is a theory of efficient computational procedures to find good solutions (Simon, 1976, p.133). Procedural rationality is a form of psychological rationality which constitutes the basic concept of Simon's behavioral theory (Novarese, Castellani, Di Giovinazzo, 2009;Barros, 2010, Schilirò, Graziano, 2011, in contrast to economic rationality, defined by Simon as 'substantive rationality'. Another way to look at bounded rationality is that, because individuals lack the ability and resources to arrive at the optimal solution, they instead apply their rationality only after having greatly simplified the choices available.…”

Bounded Rationality and Perfect Rationality: Psychology into Economics

“…According to Simon a search for procedural rationality is the search for computational efficiency, and a theory of procedural rationality is a theory of efficient computational procedures to find good solutions (Simon, 1976, p.133). Procedural rationality is a form of psychological rationality which constitutes the basic concept of Simon's behavioral theory (Novarese, Castellani, Di Giovinazzo, 2009;Barros, 2010;, in contrast to economic rationality, defined by Simon as 'substantive rationality'. 2 Another way to look at bounded rationality is that, because individuals lack the ability and resources to arrive at the optimal solution, they instead apply their rationality only after having greatly simplified the choices available.…”

“…setting an aspiration level which, if achieved, they will be happy enough with, and if they don't, try to change either their aspiration level or their decision. Satisficing is the hypothesis that allows to the conception of diverse decision procedures and which permits rationality to operate in an open, not predetermined, space (Barros, 2010;. Real-world decisions are made using fast heuristics, 'rules of thumb', that satisfice rather than maximize utility over the long run.…”

Understanding the implementation gap of China’s urban pension scheme at the level of rural-urban migrant workers

“…Although the theory of bounded rationality criticises the assumption of perfect rationality in the classic theory of rational choice, it does not deny the assumption that decision-makers evaluate costs and benefits of choosing alternatives and then develop intentions to choose a certain alternative that benefits them (Barros, 2010;Boella, Hulstijn, & Torre, 2011;Simon, 1972Simon, , 1991.…”

“…These procedures are influenced by the agents' subjective environments and distinctive social and institutional settings. Previous research on bounded rationality has modelled the process by which people develop their perceptions and heuristics when making choices within their subjective environments and within a general, objective environment (Barros, 2010;Jones, 1999;Simon, 1982Simon, , 1991Simon, , 2000.…”