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Bounded Rationality and the Limitations of Human Nature

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Cody Scott
January 29, 2020

In The Myth of Sisyphus, Albert Camus discusses life and man’s never-ending journey to find meaning within it. Camus explains that, “In this unintelligible and limited universe, man’s fate henceforth assumes its meaning.” Camus continues, the human mind, “When it reaches its limits, must make a judgement and choose its conclusions.” This astounding and fascinating concept is one that those in a variety of fields, from social sciences to political sciences, are familiar with: bounded rationality. This concept is one that needs to be utilized to understand decisionmaking on an individual and organizational level, but it is also an important concept used when trying to understand human nature as a whole, as well as oneself. So what is bounded rationality?

In Herbert Simon’s ground breaking work, Administrative Behavior, he made a huge leap into behavioral school of thought with a better understanding of human nature and how it is best suited to meet the needs of an organization and vice versa. Simon, like many before him, sought to develop a science of public administration, one that is based on empirical facts and objective standards. Richard Dawkins, too, in The Selfish Gene found that, when observing people, “You can make some inferences about a man’s character if you know something about the conditions in which he has survived and prospered.” Through these inferences, Herbert Simon brings forth bounded rationality.

Simon notes in Administrative Behavior that, “Human beings, like most complex organisms, can only deal consciously with one or a very few things at once,” and because we are creatures of passions, habits and many unconscious activities, we can never act fully rational. Simon sees rationality on a continuum ranging from the subconscious, involuntary actions with incomplete or skewed information on one end and conscious, deliberate and complete information on the other. Individuals, groups and organizations can fall anywhere between the two extremes, but Simon identifies two general descriptions of human behavior. First is the Economic Man, who is an elite decisionmaker and a true champion of the mind and of passions. An Economic Man is one who knows all relevant aspects of the current situation, can accurately imagine all alternative courses of action and the relevant risks and consequences, understands his own, and indeed all other actor’s biases and values and knows how to assert them in the decisionmaking process – not to mention, all necessary skills needed to utilize this knowledge and make  the best decision. On the opposite end of the continuum: The Satisficing Man. This decisionmaker can only understand or consider a few aspects at a time, has an extremely narrow view of what is relevant to the situation, cannot foresee many or any alternatives and fails to completely understand his or her own or other’s biases and values that could distort the decisionmaking process. This model may also lack the needed skills and competencies to fully carry out  necessary actions to complete the decisionmaking process. Simon describes it best:

“Because administrators satisfice rather than maximize, they can choose without first examining all the possible behavior alternatives and without ascertaining that these are in fact all the alternatives … they make their decisions with relatively simple rules of thumb that do not make impossible demands on their capacity for thought. Simplification may lead to error, but there is no realistic alternative in the fact of the limits on human knowledge and reasoning.”

The limitations of human nature are easily imagined. But what does Simon, specifically, list as some of our innate limitations? The most obvious is the incompleteness of knowledge—people usually do not, and cannot, know everything relevant pertaining to a specific situation—not to mention most do not have the time or resources to devote to discovering the necessary information. Values and biases have the ability to distort memory and indulgence in cognitive bias can corrupt how we process new information. Imagine how this juggling of values combined with misunderstandings, incomplete knowledge and limited ability to conceptualize and utilize knowledge has the ability to greatly complicate human actions and decisions in a group setting. 

The very absurd world people live in is made even more tangled and irrational by the limits and biases within people’s own minds. Bounded rationality, even though it is unable to be controlled, is of great importance to not only public administrators, but anyone hoping to collaborate with anyone else. Indeed, it is even detrimental to understanding one’s own behavior and necessary to a more rational if not better decisionmaking in general. Though it may be impossible to make sense or even understand this absurd world completely as observed by Albert Camus, one can utilize a better understanding of human nature through Herbert Simon’s bounded rationality.

Author: Cody Scott is currently an MPA student at Stephen F Austin State University in Nacogdoches, Texas. His main focus is in how philosophy, human behavior, and history applies and gives better insight into the field of governance and public administration. He can be contacted anytime at cody[email protected]

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The American Society for Public Administration is the largest and most prominent professional association for public administration. It is dedicated to advancing the art, science, teaching and practice of public and non-profit administration.

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