Herbert A. Simon: Rations

“Rationality requires a complete knowledge and anticipation of the consequences that will follow on each choice. In fact, knowledge of consequences is always fragmentary”

Herbert A. Simon book Administrative Behavior

1940s-1950s, Administrative Behavior, 1947

Knowledge

“The first consequence of the principle of bounded rationality is that the intended rationality of an actor requires him to construct a simplified model of the real situation in order to deal with it. He behaves rationally with respect to this model, and such behavior is not even approximately optimal with respect to the real world. To predict his behavior we must understand the way in which this simplified model is constructed, and its construction will certainly be related to his psychological properties as a perceiving, thinking, and learning animal.”

Herbert A. Simon

Source: 1940s-1950s, Models of Man, 1957, p. 198; Cited in P. Slovic (1972, p. 2).

World , Way , Behavior , Optimism

“The principle of bounded rationality [is] the capacity of the human mind for formulating and solving complex problems is very small compared with the size of the problems whose solution is required for objectively rational behavior in the real world — or even for a reasonable approximation to such objective rationality.”

Herbert A. Simon book Administrative Behavior

Variant: The principle of bounded rationality [is] the capacity of the human mind for formulating and solving complex problems is very small compared with the size of the problems whose solution is required for objectively rational behavior in the real world — or even for a reasonable approximation to such objective rationality.
Source: 1940s-1950s, Administrative Behavior, 1947, p. 198.

World , Behavior , Problem

“It is impossible for the behavior of a single, isolated individual to reach a high degree of rationality. The number of alternatives he must explore is so great, the information he would need to evaluate them so vast that even an approximation to objective rationality is hard to conceive. Individual choice takes place in rationality is hard to conceive… Actual behavior falls short in at least three ways, of objective rationality:”

Herbert A. Simon book Administrative Behavior

1940s-1950s, Administrative Behavior, 1947

Way , Behavior

“In these two essays [the papers of 1955 and 1956] the focus is upon ways of simplifying the choice problem to bring it within the power of human computation… The key to the simplification of the choice process in both cases is the replacement of the goal of maximizing with the goal of satisficing, of finding a course of action that is ‘good enough’. I have tried, in these two essays, to show why this substitution is an essential step in the application of the principle of bounded rationality.”

Herbert A. Simon book Administrative Behavior

Source: 1940s-1950s, Administrative Behavior, 1947, p. 204‑5; As cited in: Gustavo Barros (2010) " Herbert A. Simon and the concept of rationality: boundaries and procedures http://www.scielo.br/pdf/rep/v30n3/a06v30n3.pdf." Revista de Economia Política 30.3. p. 461.

Way , Problem

“Global rationality, the rationality of neoclassical theory, assumes that the decision maker has a comprehensive, consistent utility function, knows all the alternatives that are available for choice, can compute the expected value of utility associated with each alternative, and chooses the alternative that maximizes expected utility. Bounded rationality, a rationality that is consistent with our knowledge of actual human choice behavior, assumes that the decision maker must search for alternatives, has egregiously incomplete and inaccurate knowledge about the consequences of actions, and chooses actions that are expected to be satisfactory”

Herbert A. Simon

attain targets while satisfying constraints
Simon (1997, p. 17); As cited in: Gustavo Barros (2010, p. 460).
1980s and later

Behavior , Search , Knowledge , Decision

“Roughly speaking, rationality is concerned with the selection of preferred behavior alternatives in terms of some system of values, whereby the consequences of behavior can be evaluated.”

Herbert A. Simon book Administrative Behavior

Source: 1940s-1950s, Administrative Behavior, 1947, p. 84.

Behavior

“In the process of decision those alternatives are chosen which are considered to be appropriate means of reaching desired ends. Ends themselves, however, are often merely instrumental to more final objectives. We are thus led to the conception of a series, or hierarchy, of ends. Rationality has to do with the construction of means-ends chains of this kind.”

Herbert A. Simon book Administrative Behavior

Source: 1940s-1950s, Administrative Behavior, 1947, p. 62.

Decision

“If we accept values as given and consistent, if we postulate an objective description of the world as it really is, and if we assume that the decision maker's computational powers are unlimited, then two important consequences follow. First, we do not need to distinguish between the real world and the decision maker's perception of it: he or she perceives the world as it really is. Second, we can predict the choices that will be made by a rational decision maker entirely from our knowledge of the real world and without a knowledge of the decision maker's perceptions or modes of calculation. (We do, of course, have to know his or her utility function.)
If, on the other hand, we accept the proposition that both the knowledge and the computational power of the decision maker are severely limited, then we must distinguish between the real world and the actor's perception of it and reasoning about it. That is to say, we must construct a theory (and test it empirically) of the processes of decision. Our theory must include not only the reasoning processes but also the processes that generate the actor's subjective representation of the decision problem, his or her frame.”

Herbert A. Simon

H.A. Simon (1986), " Rationality in psychology and economics http://www.kgt.bme.hu/targyak/msc/ng/BMEGT30MN40/data/JoBus-86-rationality-HSimon.pdf," Journal of Business, p. 210-11”
1980s and later

World , Knowledge , Problem , Decision

“In Administrative Behavior, bounded rationality is largely characterized as a residual category — rationality is bounded when it falls short of omniscience. And the failures of omniscience are largely failures of knowing all the alternatives, uncertainty about relevant exogenous events, and inability to calculate consequences. There was needed a more positive and formal characterization of the mechanisms of choice under conditions of bounded rationality… Two concepts are central to the characterization: search and satisficing.”

Herbert A. Simon

Source: 1960s-1970s, "Rational decision making in business organizations", Nobel Memorial Lecture 1978, p. 502; As cited in Barros (2010, p. 464-5).

Behavior , Search , Failure

“Broadly stated, the task is to replace the global rationality of economic man with a kind of rational behavior that is compatible with the access to information and the computational capacities that are actually possessed by organisms, including man, in the kinds of environments in which such organisms exist.”

Herbert A. Simon

Simon (1955) "A behavioral model of rational choice", The Quarterly Journal of Economics, Vol. 69 (1); As cited in: Gustavo Barros (2010, p. 462).
1940s-1950s

Behavior

“Rationality requires a choice among all possible alternative behaviors. In actual behavior, only a very few of all these possible alternatives come to mind.”

Herbert A. Simon book Administrative Behavior

Source: 1940s-1950s, Administrative Behavior, 1947, p. 79; As cited in: Terry Winograd, ‎Fernando Flores (1986) Understanding Computers and Cognition: A New Foundation for Design. p. 21.

Behavior

“If there were no limits to human rationality administrative theory would be barren. It would consist of the single precept: Always select that alternative, among those available, which will lead to the most complete achievement of your goals.”

Herbert A. Simon

Simon (1945, p. 240); As cited in:
1940s-1950s

“During and after World War II, a large number of academic economists were exposed directly to business life, and had more or less extensive opportunities to observe how decisions were actually made in business organizations. Moreover, those who became active in the development of the new management science were faced with the necessity of developing decision-making procedures that could actually be applied in practical situations. Surely these trends would be conducive to moving the basic assumptions of economic rationality in the direction of greater realism.”

Herbert A. Simon

1960s-1970s, "Rational decision making in business organizations", Nobel Memorial Lecture 1978

Life , War , World , Business