Quantifying Bounded Rationality: Formal Verification of Simon's Satisficing Through Flexible Stochastic Dominance

Jingyuan Li and Zhou Lin

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Abstract: This paper introduces Flexible First-Order Stochastic Dominance (FFSD), a mathematically rigorous framework that formalizes Herbert Simon's concept of bounded rationality using the Lean 4 theorem prover. We develop machine-verified proofs demonstrating that FFSD bridges classical expected utility theory with Simon's satisficing behavior through parameterized tolerance thresholds. Our approach yields several key results: (1) a critical threshold $\varepsilon

Date: 2025-07
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