(Un)bounded rationality of decision deliberation

Werner Güth

Journal of Economic Behavior & Organization, 2021, vol. 186, issue C, 364-372

Abstract: Individual decision-making, based on means-ends causality perceptions and allowing anticipation of how likely choices are to achieve goals, is defined as rational. Consequentialist rationality, which respects methodological individualism, allows us to distinguish unbounded rationality based on well-behaved preferences and no cognitive restrictions, and empirically guided bounded rationality theory which respects human cognition and psychology. In view of this methodological dualism, we mainly focus on the dynamics of boundedly rational reasoning, according to which one first specifies means and ends and then, based on more or less empirical evidence, tries to perceive how means determine the achievement of ends. To identify the dynamics of decision-making, we suggest observing (e.g., experimentally) not only the final decisions, but also their underlying deliberations. Such richer experimental data can substitute hitherto missing modules in the theory of bounded rationality: one directly asks participants what these modules are supposed to predict.

Keywords: Experimental methodology; (Un)bounded rationality; As-if optimality/satisficing; Deliberation dynamics; Decision improvement (search for similar items in EconPapers)
JEL-codes: B2 C8 C9 D1 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:186:y:2021:i:c:p:364-372

DOI: 10.1016/j.jebo.2021.03.034

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