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Bounded Rationality, Cognitive Maps, and Trial and Error Learning

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  • Richard R. Nelson

Abstract

The term "bounded rationality" is meant to connote the reasoning capabilities of an actor who, on the one hand, has a goal to achieve and an at least partially formed theory as to how to achieve it, and on the other hand, that the theory is somewhat crude, likely will be revised in the course of the effort, and that success is far from assured. This article presents a theory of how trial and error learning interacts with theory modification in the course of problem solving under bounded rationality. The empirical focus is on efforts to advance a technology, especially medical practice, but the analysis is quite general. A central question explored is what makes progress in a field hard or easy.

Suggested Citation

  • Richard R. Nelson, 2005. "Bounded Rationality, Cognitive Maps, and Trial and Error Learning," LEM Papers Series 2005/28, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    • Handle: RePEc:ssa:lemwps:2005/28
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    1. Francisco Fatas-Villafranca & Gloria Jarne & Julio Sanchez-Choliz, 2014. "Stock and Mobility of Researchers and Industrial Leadership," Metroeconomica, Wiley Blackwell, vol. 65(1), pages 95-122, February.
    2. Rok Stritar & Mateja Drnovšek, 2016. "What entrepreneurs discover when creating opportunities? Insights from Skype and YouTube ventures," International Entrepreneurship and Management Journal, Springer, vol. 12(3), pages 659-679, September.
    3. Muñoz, Félix-Fernando & Encinar, María-Isabel & Cañibano, Carolina, 2011. "On the role of intentionality in evolutionary economic change," Structural Change and Economic Dynamics, Elsevier, vol. 22(3), pages 193-203, September.
    4. Hart E. Posen & Daniel A. Levinthal, 2012. "Chasing a Moving Target: Exploitation and Exploration in Dynamic Environments," Management Science, INFORMS, vol. 58(3), pages 587-601, March.
    5. Eric von Hippel & Georg von Krogh, 2016. "CROSSROADS—Identifying Viable “Need–Solution Pairs”: Problem Solving Without Problem Formulation," Organization Science, INFORMS, vol. 27(1), pages 207-221, February.
    6. Nathalie Lazaric & Kevin Maréchal, 2010. "Overcoming inertia: insights from evolutionary economics into improved energy and climate policy," Post-Print hal-00452205, HAL.
    7. Muñoz, Félix & Encinar, María Isabel, 2007. "Action Plans and Socio-Economic Evolutionary Change," Working Papers in Economic Theory 2007/07, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
    8. , Aisdl, 2020. "Becoming Attuned," OSF Preprints j7f8y, Center for Open Science.
    9. Dirk Martignoni & Anoop Menon & Nicolaj Siggelkow, 2016. "Consequences of misspecified mental models: Contrasting effects and the role of cognitive fit," Strategic Management Journal, Wiley Blackwell, vol. 37(13), pages 2545-2568, December.
    10. Muela, E. & Schweickardt, G. & Garces, F., 2007. "Fuzzy possibilistic model for medium-term power generation planning with environmental criteria," Energy Policy, Elsevier, vol. 35(11), pages 5643-5655, November.
    11. João V. Ferreira & Nicolas Gravel, 2017. "Choice with Time," AMSE Working Papers 1729, Aix-Marseille School of Economics, France.
    12. Daniel Engler & Gino Cattani & Joe Porac, 2020. "Studying the Incubation of a New Product Market Through Realized and Alternative Histories," Strategy Science, INFORMS, vol. 5(3), pages 160-192, September.
    13. Giovanni Gavetti & Joe Porac, 2018. "On the Origin of Great Strategies," Strategy Science, INFORMS, vol. 3(1), pages 352-365, March.
    14. , Aisdl, 2020. "The Serendipity Mindset," OSF Preprints w52y9, Center for Open Science.
    15. Nelson, John P., 2023. "Differential “progressibility” in human know-how: A conceptual overview," Research Policy, Elsevier, vol. 52(2).
    16. Jaureguy, Micaela Vidal & Bianchi, Carlos & Blanchard, Pablo, 2023. "Financial and knowledge barriers to innovation: Complementary and substitution effects on innovative effort," Research Policy, Elsevier, vol. 52(7).
    17. Coccia, Mario, 2023. "New Perspectives in Innovation Failure Analysis: A taxonomy of general errors and strategic management for reducing risks," Technology in Society, Elsevier, vol. 75(C).
    18. Geels, Frank W., 2020. "Micro-foundations of the multi-level perspective on socio-technical transitions: Developing a multi-dimensional model of agency through crossovers between social constructivism, evolutionary economics," Technological Forecasting and Social Change, Elsevier, vol. 152(C).
    19. Geels, Frank W., 2014. "Reconceptualising the co-evolution of firms-in-industries and their environments: Developing an inter-disciplinary Triple Embeddedness Framework," Research Policy, Elsevier, vol. 43(2), pages 261-277.
    20. Sidney G. Winter & Gino Cattani & Alex Dorsch, 2007. "The Value of Moderate Obsession: Insights from a New Model of Organizational Search," Organization Science, INFORMS, vol. 18(3), pages 403-419, June.
    21. Jiyong Kim & Jungsub Yoon & Jeong-Dong Lee, 2024. "Technological speciation: Navigating new needs through trial and error – A rifle case study," Journal of Evolutionary Economics, Springer, vol. 34(4), pages 927-952, December.
    22. Félix-Fernando Muñoz & María-Isabel Encinar, 2019. "Some elements for a definition of an evolutionary efficiency criterion," Journal of Evolutionary Economics, Springer, vol. 29(3), pages 919-937, July.
    23. Giovanni Gavetti, 2012. "PERSPECTIVE—Toward a Behavioral Theory of Strategy," Organization Science, INFORMS, vol. 23(1), pages 267-285, February.

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