Complexity and Social Decision Rules

Abstract

The notion of ‘global rationality’ underlying the construction of ‘economic man’ that is generally accepted at least in normative economics has come increasingly under attack by those who care for more fruitful behavioral assumptions in economic reasoning. This notion is intrinsically related to various optimization programs that have been implemented in economics but that have been found only of limited use in realistic, complex situations. H. A. Simon [8] deserves credit having observed the limitation of global rationality and suggesting a modification of this program by introducing his concept of ‘limited rationality’. To a great extent these ideas were carried forward in studying human thought processes where it was found that decision-makers, for purposes of problem-solving, go through several stages of goal formation, a hierarchical representation of goals, super- and subgoals, where at every stage goal attainment rather than optimization is called for. Such programs are motivated by the complexity of problem-solving tasks that are treated successfully by decomposing problem-solving in a sequential way and by associating to every stage of the process the attainment of a subgoal. Goal-oriented behavior, therefore, is non-optimizing behavior and only improvement-related with respect to the attainment of the next goal in a sequence. (G. W. Ernst and A. Newell [2].)