Bounded Rationality in the Economics of Organization Present Use and (Some) Future Possibilities

Nicolai Foss ()

No 01-13, DRUID Working Papers from DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies

Abstract: The way in which bounded rationality enters contemporary organizational economics theorizing is examined. It is argued that, as it is being used, bounded rationality is neither necessary nor sufficient for producing the results of organizational economics. It is at best a rhetorical device, used for the purpose of loosely explaining incomplete contracts. However, it is possible to incorporate much richer notions of bounded rationality, founded on research in cognitive psychology, and to illuminate the study of economic organization by means of such notions. A number of examples are provided.

Keywords: Varieties of bounded rationality; incomplete contracts; economic organization; cognitive psychology (search for similar items in EconPapers)
JEL-codes: B41 D23 L2 M1 (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:aal:abbswp:01-13

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