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Costly and Bounded Rationality in Individual and Team Decision-Making

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  • Radner, Roy

Abstract

The "Savage paradigm" of rational decision-making under uncertainty has become the dominant model of human behavior in mainstream economics and game theory. However, under the rubric of "bounded-rationality", this model has been criticized as inadequate form both normative and descriptive viewpoints. This paper sketches the historical roots and some current development of this movement, distinguishing between attempts to extend the Savage paradigm ("costly rationality") and the need for more radical departures ("truly bounded rationality"). Copyright 2000 by Oxford University Press.

Suggested Citation

  • Radner, Roy, 2000. "Costly and Bounded Rationality in Individual and Team Decision-Making," Industrial and Corporate Change, Oxford University Press, vol. 9(4), pages 623-658, December.
  • Handle: RePEc:oup:indcch:v:9:y:2000:i:4:p:623-58
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    Cited by:

    1. Anna Grandori, 2013. "Models of rationality in economic organization: ‘economic’, ‘experiential’ and ‘epistemic’," Chapters,in: Handbook of Economic Organization, chapter 1 Edward Elgar Publishing.
    2. Marengo, Luigi & Dosi, Giovanni, 2005. "Division of labor, organizational coordination and market mechanisms in collective problem-solving," Journal of Economic Behavior & Organization, Elsevier, vol. 58(2), pages 303-326, October.
    3. Amir, Rabah & Lazzati, Natalia, 2016. "Endogenous information acquisition in Bayesian games with strategic complementarities," Journal of Economic Theory, Elsevier, vol. 163(C), pages 684-698.
    4. Shann Turnbull, 0. "Grounding a Theory of Firms in the Natural Sciences," Humanistic Management Journal, Springer, vol. 0, pages 1-28.
    5. Augier, Mie & March, James G., 2002. "A model scholar: Herbert A. Simon (1916-2001)," Journal of Economic Behavior & Organization, Elsevier, vol. 49(1), pages 1-17, September.
    6. Werner Hölzl, 2005. "The evolutionary theory of the firm: Routines, complexity and change," Working Papers geewp46, Vienna University of Economics and Business Research Group: Growth and Employment in Europe: Sustainability and Competitiveness.
    7. Shann Turnbull, 2017. "Grounding a Theory of Firms in the Natural Sciences," Humanistic Management Journal, Springer, vol. 1(2), pages 159-186, April.
    8. Kreye, M.E. & Goh, Y.M. & Newnes, L.B. & Goodwin, P., 2012. "Approaches to displaying information to assist decisions under uncertainty," Omega, Elsevier, vol. 40(6), pages 682-692.
    9. K. Foss & Nicolai Foss, 2006. "The limits to designed orders: Authority under “distributed knowledge” conditions," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 19(4), pages 261-274, December.
    10. Krasa, Stefan & Williams, Steven R., 2007. "Limited observability as a constraint in contract design," Journal of Economic Theory, Elsevier, vol. 134(1), pages 379-404, May.

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