Corpus ID: 269315

What is Bounded Rationality? Paper prepared for the Dahlem Conference 1999

  title={What is Bounded Rationality? Paper prepared for the Dahlem Conference 1999},
  author={Reinhard Selten},
The paper deals with bounded rationality understood in the tradition of H.A. Simon. Fundamental problems and theoretical issues are discussed. Special emphasis is put on aspiration adaptation theory. Further remarks concern basic models of decision behavior (like learning and expectation formation), reasoning, and the connection between bounded rationality and motivation. 

Figures from this paper

Rationality : Perfect , Absent , or Bounded ?
This paper attempts to put the research on human rationality into proper context by looking at it across disciplines and by identifying the main questions that propelled research in di erent elds.Expand
A mathematical model for consumers based on aspiration adaptation theory and bounded rationality
This paper describes characteristics of a discrete - time model for a consumers group through bounded rationality theory, where the basis of decision-making is the Aspiration Adaptation TheoryExpand
Modelling Bounded Rationality in Organizations: Progress and Prospects†
AbstractMuch of the formal modelling work in the organizational sciences relies on Herbert Simon's conception of bounded rationality, and it stakes a claim to drawing on behaviorally plausible assu...
Is Rationality Bounded? An Interpretation on Equity Premium Puzzle
Since equity premium puzzle had long been a problem, many economists tried to give reasonable interpretations to the puzzle. I focus on the type of theories using bounded rationality as the answer ...
Why do I keep going in circles? On the impossibility of constructing rational preferences
In standard models of rational choice it is typically taken for granted that preferences are given and defined over the alternatives alone, and the possibility of making a rational choice is simply aExpand
On the basis of a cognitive and evolutionary framework, this paper proposes an experimental analysis aimed at analysing individual satisfaction in a organizational task. Participants’ level ofExpand
Herbert Simon’s bounded rationality
Purpose The purpose of this paper is to investigate the historical advancements attained on the bounded rationality concept in management research, considering the key influencingExpand
Rational and irrational processes in decision making: An economic perspective
  • M. Lacatus
  • Economics
  • Mental Health: Global Challenges Journal
  • 2019
The paper presents important issues of decision making processes with an emphasis on rational and irrational components of these processes. After a short introduction outlining the need for a deeperExpand
Foreword: Special Issue in Honor of Reinhard Selten’s 85th Birthday
Abstract We summarize the career of Reinhard Selten, who received the Nobel Prize in Economics in 1994. We underline his contributions to several domains of the theory of games, to the study ofExpand
Experimental Economies and Tax Evasion: The Order Beyond the Market
Research on tax evasion will probably never get old. As long as there are taxes, there will also be policy-makers all over the world eager to tackle deviant conduct in the most efficient andExpand


Features of experimentally observed bounded rationality
On the basis of experimental evidence reported in the literature the paper draws conclusions about the bounded rationality exhibited by human economic behaviour. Among the topics discussed areExpand
Bounded rationality : Models of fast and frugal inference
The performance of the satisficing "Take The Best" algorithm is reviewed, showing that despite its frugality, Take The Best can make as many correct inferences as computationally expensive weighted linear models that use and combine all available information. Expand
Human Problem Solving
The aim of the book is to advance the understanding of how humans think by putting forth a theory of human problem solving, along with a body of empirical evidence that permits assessment of the theory. Expand
End behavior in sequences of finite prisoner's dilemma supergames
Abstract A learning theory is proposed which models the influence of experience on end behavior in finite Prisoner's Dilemma supergames. The theory is compared with experimental results. In theExpand
Cooperation and bounded recall
A two-person game has common interests if there is a single payoff pair z that strongly Pareto dominates all other payoff pairs. Suppose such a game is repeated many times, and that each playerExpand
Experimental Sealed Bid First Price Auctions with Directly Observed Bid Functions
Nine groups of three subjects each repeatedly interacted in sealed bid first price auctions for fifty periods. In every period each subject specified a piecewise linear bid function shown on theExpand
On the Prominence Structure of the Decimal System
Publisher Summary This chapter discusses a theory of the prominence of numbers of the decimal system. Basic components of the theory are the limited rational principles of rule construction byExpand
Quick estimation: Letting the environment do some of the work Simple Heuristic that make us smart
  • Quick estimation: Letting the environment do some of the work Simple Heuristic that make us smart
  • 1999
An option pricing experiment with professional traders, SFB discussion paper B
  • 1998