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(Un)bounded rationality of decision deliberation

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  • Güth, Werner

Abstract

Individual decision-making, based on means-ends causality perceptions and allowing anticipation of how likely choices are to achieve goals, is defined as rational. Consequentialist rationality, which respects methodological individualism, allows us to distinguish unbounded rationality based on well-behaved preferences and no cognitive restrictions, and empirically guided bounded rationality theory which respects human cognition and psychology. In view of this methodological dualism, we mainly focus on the dynamics of boundedly rational reasoning, according to which one first specifies means and ends and then, based on more or less empirical evidence, tries to perceive how means determine the achievement of ends. To identify the dynamics of decision-making, we suggest observing (e.g., experimentally) not only the final decisions, but also their underlying deliberations. Such richer experimental data can substitute hitherto missing modules in the theory of bounded rationality: one directly asks participants what these modules are supposed to predict.

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  • Güth, Werner, 2021. "(Un)bounded rationality of decision deliberation," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 364-372.
    • Handle: RePEc:eee:jeborg:v:186:y:2021:i:c:p:364-372
    DOI: 10.1016/j.jebo.2021.03.034
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    References listed on IDEAS

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    More about this item

    Keywords

    Experimental methodology; (Un)bounded rationality; As-if optimality/satisficing; Deliberation dynamics; Decision improvement;
    All these keywords.

    JEL classification:

    • B2 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925
    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D1 - Microeconomics - - Household Behavior

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