The bounded rationality of groups and teams

Abstract

Limited attention is a defining feature of bounded rationality. In this chapter, we survey key research topics on attention in organizational context. Since the early years of the Carnegie school, organizations have been interpreted as responses to human attentional limits. This has led to focus on how organizations provide through hierarchical decision making and task design "attention-directors" as a response to human cognitive bounds. We look at the developments of these original ideas, and to more recent approaches such as the attention-based view of the firm. We point at some specific mechanisms that can shape and guide attention allocation within organizations: control systems, communication, corporate governance, and incentives. We also present how attention allocation can have consequences for organizations' learning and adaptation to their environment. Finally, we shortly discuss the recent burst of an "inattention" literature in economics. We conclude with a set of suggestions for possible future research in this field.