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From Bounded Rationality to Collective Behavior.

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Bounded rationality (BR), an alternative to utility maximization, explains decision-making with uncertainty. This study extends BR to collective decision-making by analyzing how organizations manage information and individual reasoning limits.

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Area of Science:

  • Decision Sciences
  • Organizational Behavior
  • Cognitive Science

Background:

  • Bounded rationality (BR) offers a realistic alternative to utility maximization for decision-making under uncertainty and cognitive limitations.
  • BR is widely accepted in organization and management studies but primarily focuses on individual decision-making.
  • Extending BR to collective decision-making requires analyzing organizational structures and information flow.

Purpose of the Study:

  • To extend the theory of bounded rationality (BR) from individual to collective decision-making processes.
  • To investigate how organizational structures and information channeling mechanisms alleviate human BR.
  • To explore the coupling of BR with interaction structures for collective behavior analysis.

Main Methods:

  • Analysis of organizational structures and information flow.
  • Reconstruction of decision-making processes within organizations.
  • Collection of contributions using mathematical, experimental, and computational models.

Main Results:

  • Organizations channel information to alleviate individual bounded rationality.
  • Analysis of individual BR degrees and qualities within organizations is crucial.
  • Contributions demonstrate the coupling of BR with interaction structures yielding collective behavior.

Conclusions:

  • Organizational structures play a key role in enabling collective decision-making under bounded rationality.
  • Integrating individual BR with interaction structures provides a framework for collective behavior.
  • Multiple methodologies are valuable for studying collective bounded rationality in organizations.