How can somebody make a decision without all the facts? Well, there’s actually no other way.
BOUNDED RATIONALITY: THE ADAPTIVE TOOLBOX by Gerd Gigerenzer and Rienhard Selten.
How do real people make decisions in an uncertain world? In the book Bounded rationality: The adaptive tool box, Gigerenzer and Selten (et al.) investigate the constraints of limited information and time upon human logic and reasoning in the decision making process. The authors view Bounded Rationality neither as the optimization of limited resources under constraint nor as a study of the failings of human reasoning capability.
QUOTES:
“Visions of rationality do not respect disciplinary boundaries. Economics, psychology, animal biology, artificial intelligence, anthropology, and philosophy struggle with models of sound judgment, inference and decision making. These models evolve over time, just as the idea of rationality has a history, a present and a future (Daston 1988). Over the last centuries, models of rationality have changed when they conflicted with actual behavior, yet, at the same time, they provided prescriptions for behavior. This double role-to describe and prescribe- does not map easily onto a sharp divide between descriptive and normative models, which plays down the actual exchange between the psychological and the rational (Gigerenzer et al. 1989). Herbert Simon’s notion of bounded rationality was proposed in the mid-1950’s to connect, rather than to oppose, the rational and the psychological (Simon 1956). The aim of this book is to contribute to the process of coevolution, by inserting more psychology into rationality, and vice versa.”
“In a complex and uncertain world humans and animals make decisions under the constraints of limited knowledge, resources, and time. Yet models of rational decision making in economics, cognitive science, biology and other fields largely ignore these real constraints and instead assume agents with perfect information and unlimited time. About forty years ago Herbert Simon challenged this view with his notion of “bounded rationality”. Today, bounded rationality has become a fashionable term used for disparate views of reasoning.”
ABOUT THE AUTHORS:
Gerd Gigerenzer
Gerd Gigerenzer is Director of the Center for Adaptive Behavior and Cognition at the Max Planck Institute for Human Development in Berlin and former Professor of Psychology at the University of Chicago. He won the AAAS Prize for the best article in the behavioral sciences.
Reinhard Selten
Reinhard Selten received his PhD in mathematics at the University of Frankfurt am Main. Reinhard Selten is Fellow of the Econometric Society, President of the European Economic Association, a Honorary Member of the American Economic Association, a Member of the Nordrhein-Westfälische Akademie der Wissenschaften, and a Foreign Honorary Member of the American Academy of Arts and Sciences. He is also a Honora Patrona Komitato at Universala Esperanto Asocio. His main areas of interest are Game Theory and its applications as well as Experimental Economics and the Theory of Bounded Rationality. In 1994 he won the Nobel Memorial Prize in Economics, together with John C. Harsanyi and John F. Nash.
