Bounded Rationality The Adaptive Toolbox

by Gigerenzer, Gerd; Selten, Reinhard

• ISBN13: 9780262571647
• ISBN10: 0262571641
• Edition: Reprint
• Format: Paperback
• Copyright: 2002-07-26
• Publisher: The MIT Press

Summary

In a complex and uncertain world, humans and animals make decisions under the constraints of limited knowledge, resources, and time. Yet models of rational decision making in economics, cognitive science, biology, and other fields largely ignore these real constraints and instead assume agents with perfect information and unlimited time. About forty years ago, Herbert Simon challenged this view with his notion of "bounded rationality." Today, bounded rationality has become a fashionable term used for disparate views of reasoning. This book promotes bounded rationality as the key to understanding how real people make decisions. Using the concept of an "adaptive toolbox," a repertoire of fast and frugal rules for decision making under uncertainty, it attempts to impose more order and coherence on the idea of bounded rationality. The contributors view bounded rationality neither as optimization under constraints nor as the study of people?s reasoning fallacies. The strategies in the adaptive toolbox dispense with optimization and, for the most part, with calculations of probabilities and utilities. The book extends the concept of bounded rationality from cognitive tools to emotions; it analyzes social norms, imitation, and other cultural tools as rational strategies; and it shows how smart heuristics can exploit the structure of environments.

Author Biography

Gerd Gigerenzer is Director at the Max Planck Institute for Human Development, Berlin. He is the author of Calculated Risks, among other books, and the coeditor of Bounded Rationality: The Adaptive Toolbox and Heuristics and the Law, both published by the MIT Press.

The late Reinhard Selten was Professor at the University of Bonn and was a co-winner of the 1994 Nobel Prize in Economics.

Table of Contents

List of Participants

Rethinking Rationality

What is Bounded Rationality?

The Adaptive Toolbox

Fast and Frugal Heuristics for Environmentally Bounded Minds

Evolutionary Adaptation and the Economic Concept of Bounded Rationality -- A Dialogue

Group Report: Is there Evidence for an Adaptive Toolbox?

The Fiction of Optimization

Preferential Choice and Adaptive Strategy Use

Comparing Fast and Frugal Heuristics and Optimal Models

Group Report: Why and When Do Simple Heuristics Work?

Emotions and Cost-benefit Assessment: The Role of Shame and Self-esteem in Risk taking

Simple Reinforcement Learning Models and Reciprocation in the Prisoner's Dilemma Game

Imitation, Social Learning, and Preparedness as Mechanisms of Bounded Rationality

Decision Making in Superorganisms: How Collective Wisdom Arises from the Poorly Informed Masses

Group Report: Effect of Emotions and Social Processes on Bounded Rationality

Norms and Bounded Rationality

Prominence Theory as a Tool to Model Boundedly Rational Decisions

Goodwill Accounting and the Process of Exchange

Group Report: What is the Role of Culture in Bounded Rationality?

Subject Index

Name Index

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