SFB 303 Discussion Paper No. B - 172

Author: Selten, Reinhard
Title: Some Remarks on Bounded Rationality
Abstract: This paper cannot claim to offer an exhaustive treatment of the subject matter. Only some aspects of bounded rationality are discussed. The first section tries to sketch the historical development of the concept including some of the misdirected approaches to the problem. It is emphasized again and again, maybe to the extent of boring the reader, that the development of a theory of bounded rationality needs an empirical basis which mainly can be found in experimental research. It seems to be important to point out that the limits of rationality are not only cognitive, but also motivational. This is done in section 2. It is argued that human decisions are not based on reasoning alone. More primitive processes like routine learning are indispensable. Nevertheless it is important to understand the cognitive aspects of decision processes. Sections 3 and 4 are devoted mainly to this subject matter. We do not yet have a clear image of what bounded rationality is, but we know what it is not: Bounded rationality is not just another kind of utility maximization or something close to it.
Keywords: Limits of rationality, Casuistic structure, Strategy constructions
Creation-Date: November 1990
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