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Bounded Rationality, Ambiguity, and the Engineering of Choice

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  • James G. March
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    Abstract

    Rational choice involves two guesses, a guess about uncertain future consequences and a guess about uncertain future preferences. Partly as a result of behavioral studies of choice over a twenty-year period, modifications in the way the theory deals with the first guess have become organized into conceptions of bounded rationality. Recently behavioral studies of choice have examined the second guess, the way preferences are processed in choice behavior. These studies suggest possible modifications in standard assumptions about taste and their role in choice. This paper examines some of those modifications, some possible approaches to working on them, and some complications.

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    Bibliographic Info

    Article provided by The RAND Corporation in its journal Bell Journal of Economics.

    Volume (Year): 9 (1978)
    Issue (Month): 2 (Autumn)
    Pages: 587-608

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    Handle: RePEc:rje:bellje:v:9:y:1978:i:autumn:p:587-608

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    Cited by:
    1. Raaj Kumar Sah, 1991. "Fallibility in Human Organizations and Political Systems," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 67-88, Spring.
    2. Stefanescu, Razvan & Dumitriu, Ramona, 2013. "Procese decizionale în cadrul managementului riscurilor
      [Decision – making Processes in the Risk Management]
      ," MPRA Paper 50754, University Library of Munich, Germany, revised 17 Oct 2013.
    3. Alan B. Krueger & Daniel Kahneman & David Schkade & Norbert Schwarz & Arthur A. Stone, 2007. "National Time Accounting: The Currency of Life," Working Papers 1034, Princeton University, Department of Economics, Center for Economic Policy Studies..
      • Alan B. Krueger & Daniel Kahneman & David Schkade & Norbert Schwarz & Arthur A. Stone, 2009. "National Time Accounting: The Currency of Life," NBER Chapters, in: Measuring the Subjective Well-Being of Nations: National Accounts of Time Use and Well-Being, pages 9-86 National Bureau of Economic Research, Inc.
    4. Daniel Kahneman, 2003. "A Psychological Perspective on Economics," American Economic Review, American Economic Association, vol. 93(2), pages 162-168, May.
    5. Riel,Allard C.R.,van & Lievens,Annouk, 2003. "New service development in high tech sectors: a decision making perspective," Research Memorandum 028, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    6. Altman, Morris, 2012. "Implications of behavioural economics for financial literacy and public policy," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(5), pages 677-690.
    7. Thomas J. Miceli & Alanson P. Minkler, 1997. "Preferences, cooperation, and Institutions," Working papers 1997-06, University of Connecticut, Department of Economics.
    8. Michael Stahlman & Laura McCann, 2012. "Technology characteristics, choice architecture, and farmer knowledge: the case of phytase," Agriculture and Human Values, Springer, vol. 29(3), pages 371-379, September.
    9. Siegwart Lindenberg, 2001. "Social Rationality as a Unified Model of Man (Including Bounded Rationality)," Journal of Management and Governance, Springer, vol. 5(3), pages 239-251, September.
    10. Andrew Geddes, 2013. "The Transformation of European Migration Governance," KFG Working Papers p0056, Free University Berlin.
    11. Benson Honig & Tomas Karlsson, 2013. "An Institutional Perspective on Business Planning Activities for Nascent Entrepreneurs in Sweden and the US," Administrative Sciences, MDPI, Open Access Journal, vol. 3(4), pages 266-289, November.
    12. Silveira, Antonio Maria da, 1990. "The public choice sedition: variations on the theme of scientific warfare," Economics Working Papers (Ensaios Economicos da EPGE) 165, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
    13. Tom Thomas & Eric Lamm, 2012. "Legitimacy and Organizational Sustainability," Journal of Business Ethics, Springer, vol. 110(2), pages 191-203, October.
    14. Yan Li & Neal Ashkanasy & David Ahlstrom, 2014. "The rationality of emotions: A hybrid process model of decision-making under uncertainty," Asia Pacific Journal of Management, Springer, vol. 31(1), pages 293-308, March.
    15. Simonson, Itamar & Kivetz, Ran, 2000. "The Effects of Incomplete Information on Consumer Choice," Research Papers 1609, Stanford University, Graduate School of Business.
    16. Caroline C. Brock & Bradford L. Barham, 2013. "‘Milk is Milk’: Organic Dairy Adoption Decisions and Bounded Rationality," Sustainability, MDPI, Open Access Journal, vol. 5(12), pages 5416-5441, December.
    17. Clark, William & Mitchell, Ronald & Cash, David & Alcock, Frank, 2002. "Information as Influence: How Institutions Mediate the Impact of Scientific Assessments on Global Environmental Affairs," Working Paper Series rwp02-044, Harvard University, John F. Kennedy School of Government.
    18. Rainer Eising, 2000. "Bounded Rationality and Policy Learning in EU Negotiations: the Liberalization of the Electricity Supply Industry," EUI-RSCAS Working Papers 26, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).

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