Bounded Rationality, Shared Experiences, and Social Relationships in Herbert A. Simon’s Perspective

The fourteenth in a series of excerpts from Minds, Models and Milieux: Commemorating the Centennial of the Birth of Herbert Simon.

Stefano Fiori

In his autobiography, Herbert Simon writes: “The most important years of my life as a scientist were 1955 and 1956” (Simon, 1991a, p. 189). In those years he published two important articles that laid the foundations of his theory of bounded rationality: A Behavioral Model of Rational Choice (1955) and Rational Choice and the Structure of the Environment (1956) (henceforth, Simon (1956)). One year later, in 1957, Simon wrote a short story, The Apple, in which he presented in literary form the scientific results of Simon (1956).

The thesis of this article is that The Apple gives interesting insights into Simon’s research and that, because of its literary form, it highlights topics which are less apparent in his scientific papers. Hugo, the protagonist of The Apple, lives in isolation in a castle, and his story represents how a rationally bounded agent interacts with, and learns from, an environment by choosing not optimal but satisficing alternatives. The perspective which inspired both Simon (1956) and The Apple would remain essentially unchanged in the course of time, even when Simon examined bounded rationality in light of artificial intelligence and of simulations performed by means of computer programs.

The question from which we begin concerns the implications of an analysis of (bounded) rationality which removes human relationships, as occurs in Simon’s scientific paper of 1956 and his short story of 1957. In fact, Hugo reminds us of homo œconomicus of the neoclassical approach, that is, an individual who, given environmental constraints, is concerned solely with her/his needs. The difference with Simon’s view is that  in the neoclassical tradition s/he is perfectly rational and maximizes her/his utility, while in Simon’s view s/he is rationally limited and chooses not the best but a satisficing alternative, i.e. an alternative which meets or exceeds certain criteria different from those required by the maximization of utility function.

However, it would be a mistake to state that Simon does not consider social relationships in his work. On the contrary, he took them into account in his early works on administrative and organizational behavior, and even more so in the 1990s, when themes like loyalty, identification with organizational goals, and altruism became topics of new inquiries. These themes were not elaborated in light of artificial intelligence; rather, they remained connected to the theory of organizations, or they were influenced by other approaches, such as the Darwinian view which Simon took into account for his hypotheses on altruism. Although the two perspectives (namely, the one that emerged in the 1950s and was later developed within artificial intelligence and cognitive psychology, which analyses bounded rationality at the individual level; and the other, which deals with bounded rationality within administrative systems and organizations) are basically connected, they partially refer to different theoretical tools and use different languages. Their analysis is the subject-matter of this paper, which is organized as follows: Section 1 compares Simon’s (1956) model of bounded rationality with its literary version; Section 2 examines how bounded rationality, especially in The Apple, is represented by starting from the traditional image of an isolated individual; Section 3 discusses how the paradigm of the isolated individual raises problems relative to the emergence of meanings; Section 4 shows that Simon dealt with relationships between the individual and society in his approaches to organizational and administrative behavior and in his studies of the 1990s. Finally, Section 5 concludes.