Sublime

As a new point of view we turn to bounded rationality, a departure from the mainstream tradition. We no longer can assume that every agent is a perfect calculator. This point of view is given a great deal of emphasis by Herbert Simon. Simon argued that people do not maximize. When they’re forecasting the future, they do not perform the task of rati

human problem solving, from the most blundering to the most insightful, involves nothing more than varying mixtures of trial and error and selectivity. The selectivity derives from various rules of thumb, or heuristics, that suggest which paths should be tried first and which leads are promising.

we can often predict behavior from knowledge of the system’s goals and its outer environment, with only minimal assumptions about the inner environment.

It was built around two interrelated ideas that have been at the core of my whole intellectual activity: (1) human beings are able to achieve only a very bounded rationality, and (2) as one consequence of their cognitive limitations, they are prone to identify with subgoals.

The important lesson I learned from this analysis was that my conclusions depended at least as much on certain assumptions about boundary conditions as on the central assumptions of economic rationality that lie at the core of neoclassical theory. By boundary conditions I mean the assumptions that have to be made about which indirect effects of a c