Annals of Business Administrative Science
Online ISSN : 1347-4456
Print ISSN : 1347-4464
ISSN-L : 1347-4456
Where is Bounded Rationality From?
Nobuo TAKAHASHI
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JOURNALS OPEN ACCESS

2015 Volume 14 Issue 2 Pages 67-82

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Abstract

“Bounded rationality” has become such a key concept that the mere mention of the name “Simon” calls this phrase to mind. Nonetheless, this phrase does not appear in the original text of Administrative Behavior (Simon, 1947, 1957, 1976, 1997). In spite of this, the index of the third edition (Simon, 1976), published two years before Simon received the Nobel Prize in Economics, includes the subheading “Bounded Rationality” in three locations under the heading “Rationality.” This paper combines the writings contained in these three locations into three characteristics: (I) That is bounded by the constraints of individual rationality; (II) That makes it impossible to know all alternative behaviors and their consequences and maximize the given values as assumed in game theory; and (III) The organization provides that with a decision-making environment in which behavior that is rational from the standpoint of the given environment is also rational from the standpoint of the group. In the third edition, Simon essentially called that “bounded rationality” and drew a sharp distinction from game theory. However, the concept embodied in that is Barnard's “restricted but important capacity of choice.”

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