Towards a Historically Bounded Rationality: Herbert A. Simon’s Critique of the Neoclassical Notion of Rational Agent

Abstract

This article presents Herbert A. Simon’s critique of the two basic assumptions of the neoclassical notion of agent: perfect rationality and self-interest. It shows how Simon criticized both assumptions by recognizing that the cognitive capacities of agents are limited, showing that there are specific problems that do not have optimal solutions and that there are other motivations irreducible to self-interest, such as loyalty and group identification, which are fundamental for understanding the behavior of organizations. It is shown how Simon pointed towards a notion of rationality that is historically bounded by the interaction of the agent with its environment, which presents a complex and dynamic vision of human behavior. However, the article also shows the difficulties Simon had in achieving the full realization of this project by assuming an assumption of individualistic cognition that prevented him from giving a more substantive role to the environment in structuring agents’ behaviors. It ends by showing how the notion of habit can give a more substantive role to the environment in order to develop a historically bounded conception of rationality.