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Bounded Rationality in the Economics of Organization: Present Use and (Some) Future Possibilities

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Abstract

The way in which bounded rationality enterscontemporary organizational economicstheorizing is examined. It is argued that,as it is being used, bounded rationalityis not necessary for producing the results of organizationaleconomics. It is at best a rhetorical device,used for the purpose of loosely explainingincomplete contracts. However, it is possibleto incorporate much richer notions of boundedrationality, founded on research in cognitivepsychology, and to illuminate the study ofeconomic organization by means of such notions. A number of examples are provided.

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  1. Department of Industrial Economics and Strategy, Copenhagen Business School, Howitzvej 60, 2000, Frederiksberg, Denmark

    Nicolai J. Foss

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Foss, N.J. Bounded Rationality in the Economics of Organization: Present Use and (Some) Future Possibilities. Journal of Management & Governance 5, 401–425 (2001). https://doi.org/10.1023/A:1014007330294

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