Computable and Dynamical Systems Foundations of Bounded Rationality and Satisficing

K. Vela Velupillai

No 1116, ASSRU Discussion Papers from ASSRU - Algorithmic Social Science Research Unit

Abstract: Formally, the orthodox rational agentís 'Olympian' choices ([14], p.19) are made in a static framework. However, a formalization of consistent choice, underpinned by computability, suggests satisficing in a boundedly rational framework is not only more general than the model of 'Olympian' rationality; it is also consistently dynamic. This kind of naturally process-oriented approach to the formalization of consistent choice can be interpreted and encapsulated within the framework of decision problems - in the formal sense of metamathematics and mathematical logic - which, in turn, is the natural way of formalizing the notion of Human Problem Solving in the Newell-Simon sense. Casting Simon's insights and suggestions on boundedly rational, satisficing and adaptive choice in the formalisms of time computational complexity theory and algorithmic dynamics makes it possible to take some small first steps in the direction of a formal demonstration of this proposition. A more complete attempt would require the additional consideration of space computational complexity, which will be the next step in this research program. The latter consideration would allow one to go beyond the P?=NP conundrum and thereby justify the relative, implicit unimportance, Simon gave this issue

Keywords: Bounded Rationality; Decision Problems; Satisficing; Computability (search for similar items in EconPapers)
JEL-codes: C63 C65 C69 D03 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-hpe and nep-upt
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