Satisficing: A 'Pretty Good' Heuristic

Jonathan Bendor (), Kumar Sunil and Siegel David A
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Kumar Sunil: Stanford University, kumar_sunil@gsb.stanford.edu
Siegel David A: Florida State University, dsiegel@fsu.edu

The B.E. Journal of Theoretical Economics, 2009, vol. 9, issue 1, 38

Abstract: One of the best known ideas in the study of bounded rationality is Simon's satisficing; yet we still lack a standard formalization of the heuristic and its implications. We propose a mathematical model of satisficing which explicitly represents agents' aspirations and which explores both single-person and multi-player contexts. The model shows that satisficing has a signature performance-profile in both contexts: (1) it can induce optimal long-run behavior in one class of problems but not in the complementary class; and (2) in the latter, it generates behavior that is sensible but not optimal. The model also yields empirically testable predictions: in certain bandit-problems it pins down the limiting probabilities of each arm's use, and it provides an ordering of the arms' dynamical use-probabilities as well.

Keywords: satisficing; heuristics; bounded rationality (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (7)

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DOI: 10.2202/1935-1704.1478

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