Routledge Handbook of Bounded Rationality

Cover
Half Title
Title Page
Copyright Page
Table of contents
Contributors
Preface
1 Why bounded rationality?
	Part I Naturalizing bounded rationality
	Part II Cognitive misery and mental dualism
	Part III Ockam’s razor: mental monism and ecological rationality
	Part IV Embodied bounded rationality
	Part V Homo Oeconomicus Bundatus
	Part VI Cognitive organization
	Part VII Behavioral public policies: nudging or boosting?
	Notes
	References
2 What is bounded rationality?
	Simon’s bounded rationality
	Risk and uncertainty
	As- if and real decision- making processes
	Behavior = f (cognition, environment)
	Bounded rationality as optimization under constraints
	Bounded rationality as irrationality
	Homo heuristicus, Homo economicus, and Homer
	The ecological rationality program: Homo heuristicus
	The adaptive toolbox
	Ecological rationality of heuristics
	Ecological rationality of beliefs
	Guidelines for the study of decision making under uncertainty
	References
Part I Naturalizing bounded rationality
	3 Towards a critical naturalism about bounded rationality
		Introduction
		The “standard picture”: three normative systems of rationality
		Two objections to the standard picture
		Naturalism: its aims, scope, assumptions, and problems
		Naturalism about (bounded) rationality
		Conclusion: for a critical naturalism about rationality
		Acknowledgments
		Notes
		References
	4 Bounded rationality: The two cultures
		Introduction
		The two cultures: differences in modeling
			What do the labels “idealistic” and “pragmatic” mean?
			Optimization
			Testing models
		The two cultures: different stories about people’s bounded rationality and how to improve it
			The story told by the idealistic culture
			Nudge or boost?
		Conclusion
		Acknowledgments
		References
	5 Seeking rationality: $500 bills and perceptual obviousness
		Introduction
		Economics, bounded rationality, and perception
		What do we see and why? What’s obvious?
		Perception and rationality
			Insights from psychology and biology
			Perception and the organism-environment relationship
			Seeking or “looking for” rationality
		Rationality and the perception of value
			Opportunities and caveats
		Conclusion
		Acknowledgments
		Notes
		References
	6 Bounded rationality, distributed cognition, and the computational modeling of complex systems
		Introduction
		Modeling tasks in systems biology
		Mesoscopic modeling and the building-out strategies
		Cognitive analysis: distributed model-based reasoning
		The bounded rationality of model-building practices in systems biology
		Conclusion
		Note
		References
	7 Bounded rationality and problem solving: The interpretative function of thought
		Heuristics and insight problem solving
		The challenging issue of insight problem solving
		The role of unconscious analytic thought in insight problem solving: the emergence of the shadow area
		Restructuring as reinterpreting: the interpretative heuristic
Part III Occam’s razor
	16 Bounded reason in a social world
		Introduction
		An interactionist view of reason
		When is reason triggered?
		How does reason recognize good reasons?
		How does reason find reasons?
		Reason with limited resources works well in the right social setting
		Conclusion: a bounded reason mechanism?
		Acknowledgments
		References
	17 Rationality without optimality: Bounded and ecological rationality from a Marrian perspective
		Does rationality imply optimality?
		Marr and Poggio’s three levels of analysis
		The statistical foundations of ecological rationality
			The role of statistics in constructing the rationality problem
				Orthodox rationality and the statistical culture of data modeling
				Ecological rationality and the statistical culture of algorithmic modeling
			Bayesian reductionism and the limitations of optimal function
				Argument 1: Bayesian thinking is required to explain functional success
				Argument 2: Bayesian explanations of functional success should be preferred
				Argument 3: All learning algorithms imply an optimal Bayesian response
		The theory-dependence of Marrian decomposition
			Ecological rationality from a Marrian perspective
			The limits of Marrian decomposition: type-1 and type-2 theories
		Rationality without optimality
		References
	18 The winds of change: The Sioux, Silicon Valley, society,  and simple heuristics
		Introduction
		The fast-and-frugal heuristics framework
		The research questions of the science of simple heuristics
		On environments and heuristics
		Modern-day dramatic change: from buffalo hunting on the Great Plains to the fruits of Silicon Valley
		What might future aversive digital environments look like?: interconnectedness, influenceability, and traceability
		What heuristics might people rely on to navigate through aversive digital environments?
		What might future aversive digital societies, shaped by defensive, social, and offensive heuristics, look like?
		How can heuristics aid individuals to manage aversive change?
		How can heuristics aid societies to manage aversive change?
		Digitalization: from evolution to the children of evolution
		Conclusion: compassion in the winds of change
		Acknowledgments
		Notes
		References
	19 Ecological rationality: Bounded rationality in an evolutionary light
		Bounded rationality as proximate, ecological rationality  as ultimate analyses
		Decision making: driven by goals, shaped by ecological structure  and variability
		Cue-based behavior: fast and frugal exploitation of statistical regularity
		Fitting the right tool to the right context: ecological rationality in action
		When behavior and beliefs diverge from expectations
		Future directions in research on ecological rationality
		References
	20 Mapping heuristics and prospect theory: A study of theory integration
		Two modeling approaches for boundedly rational risky choice Cumulative prospect theory
		Heuristics
		Mapping heuristics onto CPT
		What shapes of CPT’s weighting and value function do heuristics produce?
		Characterizing changes in the behavior of heuristics across environments
		Connecting phenomena
		Conclusion
		Acknowledgments
		Notes
		References
	21 Bounded rationality for artificial intelligence
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		The comparison problem
		Comparison using simple decision heuristics
		When are decision heuristics accurate?
		An illustrative example
		How prevalent are “easy” problems?
		Sequential decision problems
		Concluding remarks
		Notes
		References
	22 Psychopathological irrationality and bounded rationality: Why is autism economically rational?
		Deductive irrationality in madness?
		From coherence to correspondence: the goal of cognitive success
		What is cognitive success?
		Are syntactical rules adaptive?
		Heuristics and ecological rationality
		Social rationality
		Ecological irrationality of psychiatric disorders
			Impermeability to environmental feedbacks
			Disabled social learning
			Distorted emotions as building blocks
		Some paradoxes of psychopathological irrationality
			Greater logical rationality in psychiatric patients
			Ecological rationality of the paranoid mind?
		Conclusion: what role for the brain?
		Acknowledgments
		Notes
		References
Part IV Embodied bounded rationality
	23 Embodied bounded rationality
		The root of bounded rationality in cognitive psychology and the   bounds of embodied cognition
		The morphology of the human body and the sensory-motor  system in cognition
		A more complex view of Simon’s scissors
		Rules of thumb: embodied heuristics
			Affordances and heuristics
			Heuristics and embodied emotions
		Embodied representations and simulations
		The disembodied approach of current social neurosciences
		Conclusion
		Notes
		References
	24 Extending the bounded rationality framework: Bounded-resource models in biology
		Brainwiring optimization
		Genome as nanobrain
		References
	25 How rationality is bounded by the brain
		What is rationality?
		The recognition of irrationality
		Brain size and speed
		Brain integration of cognition and emotion
		Brain limitations on attention and consciousness
		Conclusion: helping brains to be more rational
		Acknowledgments
		References
	26 Building a new rationality from the new cognitive neuroscience
		The theory of mind within the theory of games
		Building a new rationality from the new cognitive neuroscience
		Flexibility and blending
		Selves and choices in wayfinding
		Collective action in the wild
		Selves and choices in cognitive neuroscience
		The brain as an imagination engine for selves and stories
		The search for neuroscientifically relevant human psychological factors (NRPs)
			Dynamical cognition
			Towards a new model of rationality
		Conclusion
		Note
		References
Part V Homo Oeconomicus Bundatus
	27 Modeling Bounded Rationality in Economic Theory: Four examples
		Introduction
		Bounded rationality and mechanism design
			Bibliographic notes
			Bibliographic notes
		Long interactions and finite automata
			Bibliographic notes
		Agents with different models in mind
			Bibiliographic notes
		Acknowledgments
		References
	28 Bounded rationality, satisficing and the evolution of  economic thought: Diverse concepts
		Introduction
		An initial sketch of bounded rationality in economic thought
		Different meanings of rationality and the further development of economic thought, including the concept of ecological rationality
		Satisficing and bounded rationality
		Discussion
		Conclusion
		Notes
		References
	29 Beyond economists’ armchairs: The rise of procedural economics
		Outcome vs. process in modeling choice
			Background and focus
		The satisficer: the poster child of bounded rationality
			Economics: thesis, antithesis, synthesis
		What substantive and procedural rationality (don’t) share
		Conclusion
		Notes
		References
	30 Bounded rationality and expectations in economics
		Introduction
		Bounded rationality and expectations
		Cognitive limitations and learning
		Conclusion
		Notes
		References
	31 Less is more for Bayesians, too
		Asymmetric information in strategic games
		Good by Savage
		Uncertainty and imprecision
		Dilating probabilities
		Good’s principle and dilation
		Conclusion
		Coda: blinded by omniscience
		Notes
		References
	32 Bounded rationality as the cognitive basis for evolutionary economics
		Innovation, continuing unpredictable change, and bounded rationality
		Routines
		Deliberating, problem solving, choosing
		Innovation and the advance of know-how
		A brief summing up
		Notes
		References
	33 Beyond “bounded rationality”: Behaviours and learning in complex evolving worlds
		Introduction
		Cognitive categories and problem solving
			Framing and social embeddedness
		From individuals to organizations
			Modelling routines, memory and learning
		Conclusion
		Acknowledgements
		Notes
		References
	34 Bounded rationality and organizational decision making
		Introduction
		Are managers rational?
			Rationality in organizations
		Rationality, psychology, economics
		Bounded rationality and problem solving
		The dual process account of reasoning
		Organizations and routines
			Routinized and not routinized behavior
		Further evolutions of the notion of organizational routine
		Empirical evidence: switching from routinization to exploration
		Creativity and innovation
		Conclusion
		Notes
		References
	35 Attention and organizations
		Bounded rationality, attention, and organizations:  the Carnegie perspective
		Attention at work: organizational mechanisms
		The adaptive value of (in)attention
		Inattention: from the economist’s point of view
			Open questions
		References
	36 The bounded rationality of groups and teams
		Bounded rationality as an eye-opener: the case of hidden profiles
		Which strategy should groups use to solve hidden-profile tasks?
		Peculiar information environments trigger the use of  sub-optimal strategies
		Bounded rationality as a research program and paradigm  for group research
			Group adaptivity
			As-if models vs. process models
		Conclusion
		References
	37 Cognitive biases and debiasing in intelligence analysis
		Introduction
		Intelligence analysis
		Cognitive biases in intelligence analysis
		Debiasing strategies
		Psychologically informed interventions
		Conclusion
		Acknowledgments
		References
	39 An alternative behavioural public policy
		Introduction
		Addressing internalities
		The view from nowhere
		To reciprocate, to flourish
		Budging
		Conclusion
		References
	40 Against nudging: Simon-inspired behavioral law and economics founded on ecological rationality
		Introduction
		Expert advice and political uses of scientific claims
		Ecological rationality
		Public policy
		Heterogeneity of beliefs and behavior as a public good
		Heterogeneity forgone: costs and risks of nudging
		Beyond “as-if” to policy in a profoundly uncertain world
		The authoritarian turn
		A Simon-inspired alternative
		Against nudging
		Notes
		References
	41 Bounded rationality in political science
		Bounded rationality’s origins and principles
		Bounded rationality’s influence on political science
		An institutional bridge between the individual and organizations
		Coming to prominence: bounded rationality and theories of the  policy process
		The future of bounded rationality in political science: bridging organizational and individual choice
		Notes
		References
	42 Layering, expanding, and visualizing: Lessons learned from three “process boosts” in action
		Introduction
		Framing the decision context: gaining focus for a rural regeneration project in a new World Heritage Site
			The cognitive challenge and the context of the intervention
			Proposed solutions
			Results and impacts of the multi-methodology boost
		Expanding the set of relevant objectives: the case of an Educational Foundation for underprivileged children in Hungary
			The cognitive challenge and the context of the intervention
			Proposed solutions
			Results and impacts of the multi-methodology approach
		Visualizing preferences: how to support value functions’ elicitation in decision making
			The cognitive challenge and the context of the intervention
			Proposed solutions
			Results and impacts of the multi-methodology boost
		Conclusion
		Notes
		References
	43 Cognitive and affective consequences of information and choice overload
		Introduction
		Information and choice overload: a theoretical background
			Definition of information and choice overload
			Processes underlying the information-overload phenomenon
		Empirical evidence: effect of the provision of information and choice  on the decision-making process and the outcomes
			Information processing and usage
			Motivation for choosing and consumption
			Decision accuracy and quality
			Feelings and subjective states
		Conclusion
		Note
		References
	44 How much choice is “good enough”?: Moderators of information and choice overload
		Introduction
		Context and choice environment
			Perceptual characteristics of the information presented
			Choice set complexity, decision accountability, and the presence of a brand
			Physical arrangement of assortment and option organization
			Context specificity
		Individual characteristics of the decision-maker
			Decision goal
			Knowledge and experience
			Preference uncertainty and assessment orientation
			Positive affect
			Decision-making tendencies
			Choosing for others versus oneself
			Gender
			Age
			Cultural background
		Conclusion
		References
Part VI Cognitive organization
	34 Bounded rationality and organizational decision making
		Introduction
		Are managers rational?
			Rationality in organizations
		Rationality, psychology, economics
		Bounded rationality and problem solving
		The dual process account of reasoning
		Organizations and routines
			Routinized and not routinized behavior
		Further evolutions of the notion of organizational routine
		Empirical evidence: switching from routinization to exploration
		Creativity and innovation
		Conclusion
		Notes
		References
	35 Attention and organizations
		Bounded rationality, attention, and organizations:  the Carnegie perspective
		Attention at work: organizational mechanisms
		The adaptive value of (in)attention
		Inattention: from the economist’s point of view
			Open questions
		References
	36 The bounded rationality of groups and teams
		Bounded rationality as an eye-opener: the case of hidden profiles
		Which strategy should groups use to solve hidden-profile tasks?
		Peculiar information environments trigger the use of  sub-optimal strategies
		Bounded rationality as a research program and paradigm  for group research
			Group adaptivity
			As-if models vs. process models
		Conclusion
		References
	37 Cognitive biases and debiasing in intelligence analysis
		Introduction
		Intelligence analysis
		Cognitive biases in intelligence analysis
		Debiasing strategies
		Psychologically informed interventions
		Conclusion
		Acknowledgments
		References
Part VII Behavioral public policies
	38 “Better off, as judged by themselves”: Bounded rationality and nudging
		Acknowledgments
		References
	39 An alternative behavioural public policy
		Introduction
		Addressing internalities
		The view from nowhere
		To reciprocate, to flourish
		Budging
		Conclusion
		References
	40 Against nudging: Simon-inspired behavioral law and economics founded on ecological rationality
		Introduction
		Expert advice and political uses of scientific claims
		Ecological rationality
		Public policy
		Heterogeneity of beliefs and behavior as a public good
		Heterogeneity forgone: costs and risks of nudging
		Beyond “as-if” to policy in a profoundly uncertain world
		The authoritarian turn
		A Simon-inspired alternative
		Against nudging
		Notes
		References
	41 Bounded rationality in political science
		Bounded rationality’s origins and principles
		Bounded rationality’s influence on political science
		An institutional bridge between the individual and organizations
		Coming to prominence: bounded rationality and theories of the  policy process
		The future of bounded rationality in political science: bridging organizational and individual choice
		Notes
		References
	42 Layering, expanding, and visualizing: Lessons learned from three “process boosts” in action
		Introduction
		Framing the decision context: gaining focus for a rural regeneration project in a new World Heritage Site
			The cognitive challenge and the context of the intervention
			Proposed solutions
			Results and impacts of the multi-methodology boost
		Expanding the set of relevant objectives: the case of an Educational Foundation for underprivileged children in Hungary
			The cognitive challenge and the context of the intervention
			Proposed solutions
			Results and impacts of the multi-methodology approach
		Visualizing preferences: how to support value functions’ elicitation in decision making
			The cognitive challenge and the context of the intervention
			Proposed solutions
			Results and impacts of the multi-methodology boost
		Conclusion
		Notes
		References
	43 Cognitive and affective consequences of information and choice overload
		Introduction
		Information and choice overload: a theoretical background
			Definition of information and choice overload
			Processes underlying the information-overload phenomenon
		Empirical evidence: effect of the provision of information and choice  on the decision-making process and the outcomes
			Information processing and usage
			Motivation for choosing and consumption
			Decision accuracy and quality
			Feelings and subjective states
		Conclusion
		Note
		References
	44 How much choice is “good enough”?: Moderators of information and choice overload
		Introduction
		Context and choice environment
			Perceptual characteristics of the information presented
			Choice set complexity, decision accountability, and the presence of a brand
			Physical arrangement of assortment and option organization
			Context specificity
		Individual characteristics of the decision-maker
			Decision goal
			Knowledge and experience
			Preference uncertainty and assessment orientation
			Positive affect
			Decision-making tendencies
			Choosing for others versus oneself
			Gender
			Age
			Cultural background
		Conclusion
		References
Index