Todd,P.M.
Gigerenzer,G.

Simon proposed that human rationality is bounded by both internal (mental) and external (environmental) constraints. Traditionally, these constraints have been seen as independent, leading to a notion of bounded rationality that is either the attempt to do as well as possible given the demands of the world - the notion of optimization under constraints - or as the suboptimal outcome of the limited cognitive system - the realm of cognitive illusions. But there is a third possibility, following Simon's original conception: rather than being unrelated, the two sets of bounds may fit together like the blades in a pair of scissors. The mind can take advantage of this fit to make good decisions, by using mental mechanisms whose internal structure exploits the external information structures available in the environment. In this paper we lay out a research program for studying simple decision heuristics of this sort that expands on Simon's own search for mechanisms of bounded rationality. We then illustrate how these heuristics can make accurate decisions in appropriate environments, and present detailed examples of two heuristics inspired by Simon's ideas on recognition-based processing and satisficing in sequential search. © 2003 Elsevier Science B.V. All rights reserved.

Todd, P. M., & Gigerenzer, G. (2003). Bounding rationality to the world. Journal of Economic Psychology, 24, 143-165. (Full text)

Publication year	2003
Document type:	Article
Publication status:	Published
External URL:	http://library.mpib-berlin.mpg.de/ft/pt/PT_Bounding_2003.pdf View
Categories:
Keywords:	bounded rationalitycognitive limitsheuristicsrecognition heuristicsatisficingsequential search