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Making of satisfactory, not optimal, decisions
Bounded rationality is the idea that rationality is limited when individuals make decisions, and under these limitations, rational individuals will select
Bounded_rationality
Quality of being agreeable to reason
possess these other forms of rationality. A thing that lacks rationality is either arational, if it is outside the domain of rational evaluation, or irrational
Rationality
Paradox of the expected benefit of voting
elections based on polls resulted in a causal increase of voter turnout. Bounded rationality with Quantal response equilibrium was found to be a better fit of
Paradox_of_voting
American academic and Nobel Laureate (1916–2001)
decision-making within organizations and he is best known for the theories of "bounded rationality" and "satisficing". He and Allen Newell received the ACM Turing Award
Herbert_A._Simon
Model of humans as rational, self-interested agents
irrationalities, and to bounded rationality, which assumes that practical elements such as cognitive and time limitations restrict the rationality of agents. The
Homo_economicus
Decision-making processes in social environments
outcome. This method is known as applying bounded rationality, where an individual makes a collective and rational choice that considers "the limits of human
Social_heuristics
French economist (born 1971)
Massachusetts Institute of Technology. Gabaix continues to work on bounded rationality. His paper A Behavioral New Keynesian Model was called "the most
Xavier_Gabaix
Attempt to change a pre-existing ad hoc workflow into one based on a published rules set
practical rationality as it applies to other disciplines in which there exist models of sound judgment, inferencing, and decision-making. Rationality is thus
Rationalization_(economics)
Factors influencing economic decisions
the 1990s and into the 2000s. Bounded rationality is the idea that when individuals make decisions, their rationality is limited by the tractability
Behavioral_economics
“rational” decision model, which is often used in the decision-making process. To present a more realistic alternative to the economic rationality model
Decision-making_models
Problem of allocation of money by consumers in order to most benefit themselves
and Giroux. ISBN 978-0-374-53355-7. Aumann, Robert. "Rule-Rationality Versus Act-Rationality. Discussion Papers". ratio.huji.ac.il. Retrieved 2026-02-11
Utility_maximization_problem
Type of cognitive architecture
informative data. These agents can still be considered rational. This idea of bounded rationality was introduced by Herbert A. Simon, who along with Allen
FORR
Mathematical game
illustrates the difference between the perfect rationality of an actor and the common knowledge of the rationality of all players. To achieve its Nash equilibrium
Guess_2/3_of_the_average
Concept in communication theory
rationality approach. Mumby and Putnam introduced the concept of bounded emotionality as an alternative organizational concept to bounded rationality
Bounded_emotionality
Ecological rationality is a particular account of practical rationality, which in turn specifies the norms of rational action – what one ought to do in
Ecological_rationality
Cognitive heuristic of searching for an acceptable decision
realism. He referred to this approach as bounded rationality. Moral satisficing is a branch of bounded rationality that views moral behavior as based on
Satisficing
Mathematical models of strategic interactions
from psychology, exploring bounded rationality, fairness, and reciprocity, challenging the assumption of perfect rationality. From the 2010s onward, game
Game_theory
Approach to optimizing robustness to failure
implementing a satisficing strategy under bounded rationality. For instance, in discussing bounded rationality and satisficing in conservation and environmental
Info-gap_decision_theory
Problem-solving method
problem solving that showed that we operate within what he calls bounded rationality. He coined the term satisficing, which denotes a situation in which
Heuristic
State of prolonged public dispute or debate
frequently explained (particularly by Daniel Kahneman) by reference to a 'bounded rationality' – in other words, that most judgments are made using fast acting
Controversy
Topics referred to by the same term
up bounded in Wiktionary, the free dictionary. Boundedness, bounded, or unbounded may refer to: Bounded rationality, the idea that human rationality in
Boundedness
German economist and Nobel Laureate (1930–2016)
John Harsanyi and John Nash). He is also well known for his work in bounded rationality and can be considered one of the founding fathers of experimental
Reinhard_Selten
Israeli economist
primary research focuses on economic theory, specifically game theory, bounded rationality, choice theory, economics and language, and experimental economics
Ariel_Rubinstein
Class of models in the behavioral sciences
philosophers for decades. Some economists have developed models of bounded rationality, such as Herbert Simon, which hope to be more psychologically plausible
Rational_choice_model
Inefficiently allocated markets
information asymmetry; if there is unequal bargaining power; if there is bounded rationality or irrationality; and if there are macro-economic failures such as
Market_failure
rationality as it relates to environmental policy decisions. Bounded rationality is the idea that rationality is limited when individuals make decisions. Limitations
Bounded rationality in environmental decision making
Bounded_rationality_in_environmental_decision_making
theory of institutions. The book explains bounded rationality and opportunism. Based on bounded rationality and opportunism, He analyze economic organizations
The Economic Institutions of Capitalism
The_Economic_Institutions_of_Capitalism
German psychologist (born 1947)
September 1947) is a German psychologist who has studied the use of bounded rationality and heuristics in decision making. Gigerenzer is director emeritus
Gerd_Gigerenzer
Systematic pattern of deviation from norm or rationality in judgment
sometimes difficult to distinguish. These include: Bounded rationality — limits on optimization and rationality Prospect theory Evolutionary psychology — Remnants
Cognitive_bias
Two-player extensive form game
the experimental data, we either need some altruistic agents or some bounded rational agents. One reason people may deviate from equilibrium behavior is
Centipede_game
Solution concept in game theory
McKelvey and Thomas Palfrey, it provides an equilibrium notion with bounded rationality. QRE is not an equilibrium refinement, and it can give significantly
Quantal_response_equilibrium
Cost of making any trade
reject the notion of instrumental rationality and its implications for predicting behavior. Whereas instrumental rationality assumes that an actor's understanding
Transaction_cost
Israeli-American psychologist and economist (1934–2024)
Retrieved March 24, 2019. Kahneman, Daniel (December 8, 2002). "Maps of Bounded Rationality: A Perspective on Intuitive Judgement and Choice" (PDF). nobelprize
Daniel_Kahneman
Psychological problem-solving tendency
or cognitive misers depending on their goals. Psychology portal Bounded rationality Low-information voter Motivated reasoning Representativeness heuristic
Cognitive_miser
Logical paradox in decision-making theory
force. Apel, Karl-Otto (1996). Selected Essays: Ethics and the Theory of Rationality. Humanities Press International. pp. 210–211. Aguiar, Fernando; Parravano
Paradox_of_tolerance
Standard example in game theory
(Revised ed.). Basic Books. ISBN 0-465-00564-0. Bicchieri, Cristina (1993). Rationality and Coordination. Cambridge University Press. Chess, David M. (December
Prisoner's_dilemma
School of economic thought
formulating two "seemingly incompatible" concepts: bounded rationality and rational expectations. Bounded rationality was developed by Herbert A. Simon, along with
Carnegie_School
Overuse of a shared resource
higher the chances are for successful technological developments. Bounded rationality – Making of satisfactory, not optimal, decisions Collective action
Tragedy_of_the_commons
Solution concept of a non-cooperative game
equilibria. M equilibrium - an adaptation of Nash equilibrium to boundedly-rational players. Manipulated Nash equilibrium - a relaxation of Nash equilibrium
Nash_equilibrium
German psychologist (born 1963)
Adaptive Rationality at the Max Planck Institute for Human Development in Berlin. Hertwig has been a key contributor to the study of bounded rationality, or
Ralph_Hertwig
Crime is based on rational choices
aspect of rational choice theory is the fact that many offenders make decisions based on bounded/limited rationality. Ideas of limited rationality emphasize
Rational choice theory (criminology)
Rational_choice_theory_(criminology)
Concept in game theory
players would try to predict how other players act. They model the level of "rational expectation" players have by their ability to form priors (models) about
Focal_point_(game_theory)
Interdisciplinary research discipline
equilibrium is replaced by the less restrictive postulate of agents with bounded rationality adapting to market forces, including game-theoretical contexts. Starting
Computational_economics
Decision rule used for minimizing the possible loss for a worst-case scenario
game theory Definitions Asynchrony Bayesian regret Best response Bounded rationality Cheap talk Coalition Complete contract Complete information Complete
Minimax
Entity that always performs optimal actions from given information
of rational choice theory and bounded rationality to formalize and predict the behavior of individuals and firms. Rational agents sometimes behave in manners
Rational_agent
Problem in game theory
page 99. 1988. Arthur, W. Brian (1994). "Inductive Reasoning and Bounded Rationality" (PDF). American Economic Review: Papers and Proceedings. 84: 406–411
El_Farol_Bar_problem
Process of reasoning backwards in sequence
sequential rationality to identify an optimal action for each information set in a given game tree. It develops the implications of rationality via individual
Backward_induction
as the perceived value. Arthur, W. Brian “Inductive Reasoning and Bounded Rationality”, American Economic Review (Papers and Proceedings), 84,406-411,
List_of_games_in_game_theory
Paper-and-pencil game for two players
game theory Definitions Asynchrony Bayesian regret Best response Bounded rationality Cheap talk Coalition Complete contract Complete information Complete
Tic-tac-toe
perfect rationality, instead emphasizing how real-world decision-making is shaped by cognitive biases, emotions, social dynamics, and bounded rationality. Emerging
Behavioral_strategy
Quality of a strategy in game theory
is assumed that rationality among players is common knowledge, that is, each player knows that the rest of the players are rational, and each player
Strategic_dominance
Ability of a computer system to cope with errors during execution
Multistability Bifurcation Coupled map lattices Game theory Prisoner's dilemma Rational choice theory Bounded rationality Evolutionary game theory v t e
Robustness_(computer_science)
Situation where total gains match total losses
payoff in a zero-sum game gives rise to a generalized relative selfish rationality standard, the punishing-the-opponent standard, where both players always
Zero-sum_game
American cognitive psychologist
known for the specification and testing of heuristics and models of bounded rationality in the field of judgment and decision making. He is a Partner Research
Daniel_Goldstein
applied in complex and uncertain situations. Social rationality is a form of bounded rationality applied to social contexts, where individuals make choices
Social_rationality
Hungarian and American mathematician and physicist (1903–1957)
answer a question of Haar regarding whether there existed an algebra of all bounded functions on the real number line such that they form "a complete system
John_von_Neumann
Poker game developed by Harold Kuhn
game theory Definitions Asynchrony Bayesian regret Best response Bounded rationality Cheap talk Coalition Complete contract Complete information Complete
Kuhn_poker
Game whose outcome can be correctly predicted
game theory Definitions Asynchrony Bayesian regret Best response Bounded rationality Cheap talk Coalition Complete contract Complete information Complete
Solved_game
Systems-based study of economic processes
equilibrium is replaced by the less restrictive postulate of agents with bounded rationality adapting to market forces. ACE models apply numerical methods of
Agent-based computational economics
Agent-based_computational_economics
Hand game for two players or more
game theory Definitions Asynchrony Bayesian regret Best response Bounded rationality Cheap talk Coalition Complete contract Complete information Complete
Rock_paper_scissors
Type of cognitive bias
accessible attribute of similarity. Psychology portal Philosophy portal Bounded rationality Inattentional blindness Labeling theory List of cognitive biases
Attribute_substitution
Conflict between safety and cooperation
equilibrium depends on the payoffs, but the risk dominance condition places a bound on the mixed strategy Nash equilibrium. No payoffs (that satisfy the above
Stag_hunt
Game theory scenario
game theory Definitions Asynchrony Bayesian regret Best response Bounded rationality Cheap talk Coalition Complete contract Complete information Complete
Win–win_game
Tendency to overestimate in auctions
game theory Definitions Asynchrony Bayesian regret Best response Bounded rationality Cheap talk Coalition Complete contract Complete information Complete
Winner's_curse
Concept in game theory
principle of rationality. A rational player always make decisions that maximise their own utility, however, players are not always rational. Therefore,
Non-credible_threat
Pairing where no unchosen pair prefers each other over their choice
Gharan, Shayan Oveis; Weber, Robbie (2018). "A simply exponential upper bound on the maximum number of stable matchings". In Diakonikolas, Ilias; Kempe
Stable_matching_problem
Study of circular causal processes
Multistability Bifurcation Coupled map lattices Game theory Prisoner's dilemma Rational choice theory Bounded rationality Evolutionary game theory v t e
Cybernetics
Search algorithm
performed in the same time. Like its predecessor, it belongs to the branch and bound class of algorithms. The optimization reduces the effective depth to slightly
Alpha–beta_pruning
Logically self-contradictory statement
compounded by the influence of emotion on rational judgement, which comes under the broader concept of bounded rationality. A key distinction in literature is
Solomon's_paradox
Simple mathematical game
game. It is a multi-player version of the ultimatum game. There are five rational pirates (in strict decreasing order of seniority A, B, C, D and E) who
Pirate_game
Game theory case weighing own/others' sacrifice
game theory Definitions Asynchrony Bayesian regret Best response Bounded rationality Cheap talk Coalition Complete contract Complete information Complete
Volunteer's_dilemma
Book by Herbert Simon
the rational and the nonrational aspects of human social behavior. Administrative theory is peculiarly the theory of intended and bounded rationality –
Administrative_Behavior
Latin translation of a Greek aphorism
Shields, and the title of his composition was Vita Brevis Ars Longa. Bounded rationality Parallelism (rhetoric) Hippocrates. "Aphorismi". In Emile Littré
Ars_longa,_vita_brevis
Relationship between experience producing a good and the efficiency of that production
expanding production have been criticized, with factors such as bounded rationality and durable products cited as reasons for this. The well travelled
Experience_curve_effect
English saying meaning "equivalent retaliation"
game theory Definitions Asynchrony Bayesian regret Best response Bounded rationality Cheap talk Coalition Complete contract Complete information Complete
Tit_for_tat
Human behavior pattern in which the participant takes on increasing risk
(September 1, 1999). "The Sunk Cost and Concorde Effects: Are Humans Less Rational Than Lower Animals?". Psychological Bulletin. 125 (5): 591–600. doi:10
Escalation_of_commitment
Israeli psychologist (1937–1996)
began in the late 1960s. Their work explored the biases and failures in rationality continually exhibited in human decision-making. Starting with their first
Amos_Tversky
Simple strategies or mental processes involved in making quick decisions
decisions Bounded rationality – Making of satisfactory, not optimal, decisions Debiasing – Reduction of bias Ecological rationality Great Rationality Debate –
Heuristic_(psychology)
Cognitive bias
1111/ecin.12239. S2CID 153199766. Kahneman, Daniel (2003). "Maps of Bounded Rationality: Psychology for Behavioral Economics". The American Economic Review
Status_quo_bias
Finding an optimal algorithm for playing chess
the advances in technology". Shannon number (a calculation of the lower bound of the game-tree complexity of chess) First-move advantage in chess This
Solving_chess
Problem in process of sharing surplus
game theory Definitions Asynchrony Bayesian regret Best response Bounded rationality Cheap talk Coalition Complete contract Complete information Complete
Cooperative_bargaining
Economics that focuses on institutions
economics focuses on learning, bounded rationality, and evolution (rather than assuming stable preferences, rationality and equilibrium). It was a central
Institutional_economics
Military strategy during the Cold War with regard to the use of nuclear weapons
rational choice and game-theoretic models of decision making (see game theory). Rational deterrence theory entails: Rationality: actors are rational Unitary
Deterrence_theory
Concept in game theory
game theory Definitions Asynchrony Bayesian regret Best response Bounded rationality Cheap talk Coalition Complete contract Complete information Complete
Shapley_value
American economist and Nobel Laureate (born 1943)
to refine or extend rational expectations reasoning by further: studying the conditions under which systems with bounded rationality of agents and adaptive
Thomas_J._Sargent
Hand game for two or more players
game theory Definitions Asynchrony Bayesian regret Best response Bounded rationality Cheap talk Coalition Complete contract Complete information Complete
Chopsticks_(hand_game)
Startup company valued at over $1 billion
Getting big too fast: Strategic dynamics with increasing returns and bounded rationality. Management Science, 53(4), 683–696. Porter, Michael E. (March 2001)
Unicorn_(finance)
Game in economic experiments
other iterated games.[citation needed] However, this explanation (bounded rationality) is less commonly offered now, in light of subsequent empirical evidence
Ultimatum_game
Condition in economics and game theory
game theory Definitions Asynchrony Bayesian regret Best response Bounded rationality Cheap talk Coalition Complete contract Complete information Complete
Perfect_information
Situation where all parties are worse off
lost. In the past in Europe, women accused of being witches were sometimes bound and then thrown or dunked in water to test their innocence. A witch would
No-win_situation
Process where information about current status is used to influence future status
Multistability Bifurcation Coupled map lattices Game theory Prisoner's dilemma Rational choice theory Bounded rationality Evolutionary game theory v t e
Feedback
Branch of economic theory
out-of-equilibrium economics emphasizes the importance of time, uncertainty, bounded rationality and the role of institutions in shaping economic outcomes. It was
Non-equilibrium_economics
Model of conflict for two players in game theory
(1990-10-01). "Punishment in Iterated Chicken and Prisoner's Dilemma Games". Rationality and Society. 2 (4): 449–470. doi:10.1177/1043463190002004004. ISSN 1043-4631
Chicken_(game)
Economics concept
religious belief. Caplan posits that there are two types of rationality: Epistemic rationality, which roughly consists of forming beliefs in truth-conducive
Rational_irrationality
Tendency to adopt group beliefs and behaviors
ISBN 978-1-4008-3472-3. JSTOR j.ctv36mk90z. Simon, Herbert A. (1990), "Bounded Rationality", in Eatwell, John; Milgate, Murray; Newman, Peter (eds.), Utility
Herd_mentality
Facilitating a peaceful outcome to a dispute
maint: location missing publisher (link) Nicholson, Michael (1992). Rationality and the analysis of international conflict (in German). Cambridge University
Conflict_resolution
Decision making paradigm
Fiction of Optimization". In Gerd Gigerenzer, Reinhard Selten (ed.). Bounded Rationality : The Adaptive Toolbox (1 ed.). London: MIT. pp. 111–112. ISBN 0-262-57164-1
Fredkin's_paradox
Adding to a project via many small changes instead of fewer large changes
rationality in the 1950s as a middle way between the rational actor model and bounded rationality, as both long term, goal-driven policy rationality and
Incrementalism
Ontological debate
of rationality or bounded rationality, contextual rationality bridges the constructivist-rationalist divide by contending that actors are rational; they
Rationalist–constructivist debate
Rationalist–constructivist_debate
Transactional view of violent conflict in international relations theory
agreement that goes short of war? In the bargaining model, war between rational actors is possible due to uncertainty and commitment problems. As a result
Bargaining_model_of_war
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