Models of Bounded Rationality: The Approach of Fast and Frugal Heuristics
AbstractIn a complex and uncertain world, humans draw inferences and make decisions under the constraints of limited knowledge, resources, and time. Herbert Simon, with his call for models of bounded rationality, can be seen as one of the fathers of the recently initiated research program on "simple heuristics that make us smart" (Gigerenzer/Todd/the ABC Research Group, 1999). These heuristics perform well because they are ecologically rational: they explore the structure of environmental information and are adapted to this structure. The present review paper introduces the key concepts of this research tradition, and provides two examples: (1) The recognition heuristic, which exploits a partial lack of knowledge, and (2) Take The Best, a simple lexicographic strategy that deliberately ignores information although it is available. The paper explains their ecological rationality, provides empirical evidence of their use, and illustrates some of their applications in consumer behaviour and group decision making. Finally, this research program is related to various notions of rationality.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Rainer Hampp Verlag in its journal Management Revue - The international Review of Management Studies.
Volume (Year): 15 (2004)
Issue (Month): 4 ()
Contact details of provider:
Web page: http://www.hampp-verlag.de/
Postal: Rainer Hampp Verlag, Journals, Marktplatz 5, 86415 Mering, Germany. A subscripton is required to access pdf files. Pay per article is available at
Find related papers by JEL classification:
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
- M10 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - General
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Isabelle Salle & Pascal Seppecher, 2013. "Social Learning about Consumption," GREDEG Working Papers 2013-18, Groupe de REcherche en Droit, Économie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis, revised Sep 2013.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rainer Hampp).
If references are entirely missing, you can add them using this form.