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Beyond "Bounded Rationality": Behaviours and Learning in Complex Evolving Worlds

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  • Giovanni Dosi
  • Marco Faillo
  • Luigi Marengo

Abstract

This work challenges the very notion of bounded rationality as dangerously too near to some "unbounded rationality" used as a benchmark. Should we assume that there is an "unbounded" rationality as a benchmark? Should one start, in order to describe and interpret human behaviour, from a model which assumes that we, human beings, have complete and well-defined knowledge of our preferences, all possible states of the world, all possible actions (our "technologies"), the mappings among them, and then look for possible "bounds" and "biases"? Our answer is negative. Rather, the question should be: how do human agents and organizations thereof actually behave in complex and changing environments? Answering this question, we suggest, entails also a significant departure from what is now accepted as behavioural economics, often meant as the analysis of more or less significant deviations from the "Olympic rationality". On the contrary, we suggest, human beings and human organizations behave quite distinctively from the prescriptive model derived from the axioms of rationality.

Suggested Citation

  • Giovanni Dosi & Marco Faillo & Luigi Marengo, 2018. "Beyond "Bounded Rationality": Behaviours and Learning in Complex Evolving Worlds," LEM Papers Series 2018/26, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    • Handle: RePEc:ssa:lemwps:2018/26
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    References listed on IDEAS

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    1. Giovanni Dosi & Mauro Napoletano & Andrea Roventini & Joseph E. Stiglitz & Tania Treibich, 2020. "Rational Heuristics? Expectations And Behaviors In Evolving Economies With Heterogeneous Interacting Agents," Economic Inquiry, Western Economic Association International, vol. 58(3), pages 1487-1516, July.
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    7. Giovanni Dosi & Luigi Marengo & Evita Paraskevopoulou & Marco Valente, 2017. "A model of cognitive and operational memory of organizations in changing worlds," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 41(3), pages 775-806.
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    10. Giovanni Dosi & Marco Faillo & Luigi Marengo, 2003. "Organizational Capabilities, Patterns of Knowledge Accumulation and Governance Structures in Business Firms. An Introduction," LEM Papers Series 2003/11, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    11. Giovanni Dosi & Luigi Marengo & Andrea Bassanini & Marco Valente, 2000. "Norms as Emergent Properties of Adaptive Learning: The Case of Economic Routines," Chapters, in: Innovation, Organization and Economic Dynamics, chapter 6, pages 189-210, Edward Elgar Publishing.
    12. Luigi Marengo & Corrado Pasquali, 2011. "The construction of choice: a computational voting model," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 6(2), pages 139-156, November.
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    18. Giovanni Dosi & Andrea Roventini, 2016. "The Irresistible Fetish of Utility Theory: From “Pleasure and Pain” to Rationalising Torture," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 51(5), pages 286-287, September.
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    Cited by:

    1. Giovanni Dosi & Mauro Napoletano & Andrea Roventini & Joseph E. Stiglitz & Tania Treibich, 2020. "Rational Heuristics? Expectations And Behaviors In Evolving Economies With Heterogeneous Interacting Agents," Economic Inquiry, Western Economic Association International, vol. 58(3), pages 1487-1516, July.
    2. repec:hal:spmain:info:hdl:2441/31dhti786q9k0q2i04klh6no54 is not listed on IDEAS
    3. Giovanni Dosi & Andrea Roventini, 2019. "More is different ... and complex! the case for agent-based macroeconomics," Journal of Evolutionary Economics, Springer, vol. 29(1), pages 1-37, March.

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    Keywords

    bounded rationality; heuristics; cognition; memory;
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