Bounded Rationality, Satisficing and the Evolution of Economic Thought

Clement Tisdell

No 264873, Economic Theory, Applications and Issues Working Papers from University of Queensland, School of Economics

Abstract: Provides a sketch of the development of the concept of bounded rationality in economic thought. The concept of rationality has several meanings. These different meanings are taken into account in considering the further development of economic thought. Different views of ecological rationality are critically examined in the light of these concepts. Whether or not various theories of behavioral economics can be classified as exhibiting bounded rationality is discussed. Satisficing behavior is commonly associated with bounded rationality but as demonstrated, it is not the only reason for adopting such behavior. The idea of some authors that optimization models under constraints are of little or no relevance to bounded rationality is rejected. Bounded rationality is an important contributor to the diversity of (economic) behaviors. This is stressed. Whether or not a behavior is rational depends to a considerable extent on the situation (the constraints) that decision-makers or actors face. The time-constraint is very important as an influence on the rationality of decisions. Aspects of this are covered.

Keywords: Institutional; and; Behavioral; Economics (search for similar items in EconPapers)
Pages: 21
Date: 2017-11-13
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-exp, nep-hme, nep-hpe, nep-pke and nep-upt
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:uqseet:264873

DOI: 10.22004/ag.econ.264873

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