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Computable and Dynamical Systems Foundations of Bounded Rationality and Satisficing

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  • K. Vela Velupillai

Abstract

Formally, the orthodox rational agentís 'Olympian' choices ([14], p.19) are made in a static framework. However, a formalization of consistent choice, underpinned by computability, suggests satisficing in a boundedly rational framework is not only more general than the model of 'Olympian' rationality; it is also consistently dynamic. This kind of naturally process-oriented approach to the formalization of consistent choice can be interpreted and encapsulated within the framework of decision problems - in the formal sense of metamathematics and mathematical logic - which, in turn, is the natural way of formalizing the notion of Human Problem Solving in the Newell-Simon sense. Casting Simon's insights and suggestions on boundedly rational, satisficing and adaptive choice in the formalisms of time computational complexity theory and algorithmic dynamics makes it possible to take some small first steps in the direction of a formal demonstration of this proposition. A more complete attempt would require the additional consideration of space computational complexity, which will be the next step in this research program. The latter consideration would allow one to go beyond the P?=NP conundrum and thereby justify the relative, implicit unimportance, Simon gave this issue

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  • K. Vela Velupillai, 2011. "Computable and Dynamical Systems Foundations of Bounded Rationality and Satisficing," ASSRU Discussion Papers 1116, ASSRU - Algorithmic Social Science Research Unit.
    • Handle: RePEc:trn:utwpas:1116
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    References listed on IDEAS

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    1. Smith,Vernon L., 2009. "Rationality in Economics," Cambridge Books, Cambridge University Press, number 9780521133388.
    2. K. Vela Velupillai, 2005. "The impossibility of an effective theory of policy in a complex economy," Department of Economics Working Papers 0514, Department of Economics, University of Trento, Italia.
    3. Gilboa, Itzhak, 2012. "Rational Choice," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262518058, December.
    4. J. Barkley Rosser Jr. (ed.), 2009. "Handbook of Research on Complexity," Books, Edward Elgar Publishing, number 3625.
    5. K. Vela Velupillai, 2007. "A Computable Economist�s Perspective on Computational Complexity," Department of Economics Working Papers 0723, Department of Economics, University of Trento, Italia.
    6. Samuelson, Paul A, 1972. "Maximum Principles in Analytical Economics," American Economic Review, American Economic Association, vol. 62(3), pages 249-262, June.
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    More about this item

    Keywords

    Bounded Rationality; Decision Problems; Satisficing; Computability;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • C65 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Miscellaneous Mathematical Tools
    • C69 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Other
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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