Bounded rationality
We decide with limited information, time, and computing capacity, so we look for an option that is good enough instead of the best one.
What problem it addresses
It corrects the idea that people compare every option and choose the optimal one. It describes how decisions are really made when you cannot know everything.
An example
You are looking for a place to live, you have five requirements, and there are hundreds of listings.
Simon called this strategy satisficing. It is not a flaw; it is the reasonable way to decide within limits.
Why it happens
We do not have all the information or the time to get it.
Nor can we compute everything, even if we had it.
So we set a bar and choose the first option that clears it.
Applications in design
Use it like this
Reduce what has to be compared, with a few clear options and visible criteria.
Avoid
Offering dozens of nearly identical plans and expecting people to choose the best one.
Don’t fall for it
Decide beforehand what is “good enough” and stop searching when you find it.
Nobel 1978
What the research says
Simon received the Nobel Prize in Economics for his research on how decisions are made in organizations.
Solid evidence. It is a theoretical framework more than an effect measured in an experiment. Its influence can be seen throughout later behavioral economics.
Connections
Authors and works
- 1955
Herbert A. Simon
Proposed a model of choice with limits on information and computation.
- 1956
Herbert A. Simon
Introduced the term satisficing, which blends satisfy and suffice.
Sources
Original sources
- Simon, H. A. (1955). A behavioral model of rational choice. The Quarterly Journal of Economics, 69(1), 99–118. View source: Simon, H. A. (1955)
- Simon, H. A. (1956). Rational choice and the structure of the environment. Psychological Review, 63(2), 129–138. View source: Simon, H. A. (1956)
Secondary sources
- NobelPrize.org. (1978). The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1978: Herbert A. Simon. View source: NobelPrize.org. (1978)
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