Reinhard Selten (2011) - Reaching Good Decisions without Utility and Probability Judgements - The Approach of Bounded Rationality

Reinhard Selten (2011)

Reaching Good Decisions without Utility and Probability Judgements - The Approach of Bounded Rationality

Reinhard Selten (2011)

Reaching Good Decisions without Utility and Probability Judgements - The Approach of Bounded Rationality

Abstract

We give an introduction to the notion of Bounded Rationality. In accordance with experimental evidence, Bounded Rationality is a theory of decision-making not reliant on the decision-maker’s capability to form consistent probability and utility judgments. As a general building block of a theory of Bounded Rationality, we sketch Aspiration Adaptation Theory, an approach to decision-making based on multiple incomparable goals, and briefly outline recent experimental results demonstrating its descriptive and prescriptive validity.

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