What is bounded rationality?

The term “bounded rationality” was introduced by Nobel laureate Herbert Simon who asked, how do human beings reason when the conditions for rationality postulated by neoclassical economics theory are not met?” In this talk at the Summer Institute for Bounded Rationality 2014, Gerd Gigerenzer, Director of the Max Planck Institute for Human Development, will introduce how the fast-and-frugal heuristics research program has begun to answer Simon’s question.

Fast-and-frugal heuristics are efficient cognitive strategies that ignore information, and stand in contrast to the classical view that heuristics are error-prone and thus sub-optimal. The research on the adaptive toolbox indicates that (i) individuals and organizations often rely on simple heuristics adaptively, and (ii) ignoring information can lead to more accurate decisions in uncertain environments.

This talk was presented at the Summer Institute for Bounded Rationality 2014, hosted by the Max Planck Institute for Human Development in Berlin, Germany, from 10 to 17 June. The 2014 theme was “Simple Solutions for a Complex World”. The summer institute is an annual event that hosts young scientists from various countries and disciplines for a week of exchange about bounded rationality.

For more information, visit https://www.mpib-berlin.mpg.de/en/res...