Introduction to Herbert A. Simon
Herbert A. Simon (1916–2001) was an American economist and political scientist who made groundbreaking contributions to modern business economics and administrative research. Awarded the Nobel Prize in Economic Sciences in 1978, Simon is best known for his pioneering work on the theory of bounded rationality. This theory posits that individuals cannot achieve perfectly rational decisions due to cognitive and social limitations.
Simon’s academic journey led him to earn a Ph.D. from the University of Chicago in 1943. Following various research roles and teaching positions, he settled at Carnegie Mellon University in 1949 and remained there for over five decades. His tenure included significant roles in the university’s development, notably contributing to what is now known as the Tepper School of Business.
Simon’s illustrious career also saw him receiving the A.M. Turing Award in 1975 for his influential work in computer science and artificial intelligence, along with the U.S. National Medal of Science in 1986. His prolific writing includes seminal works such as Administrative Behavior (1947), The Sciences of the Artificial (1968), and Models of Bounded Rationality (1982).
Key Takeaways
- Herbert A. Simon is closely linked to the theory of bounded rationality, which challenges traditional notions of rational behavior in economics.
- He revolutionized modern business economics and administrative research, earning the Nobel Prize in Economic Sciences in 1978.
- Simon’s groundbreaking work extended to artificial intelligence, for which he received the A.M. Turing Award in 1975.
Herbert A. Simon and Bounded Rationality
Simon challenged the classical economic view that posits economic behavior as entirely rational. Rather than advocating for decisions based on complete information to maximize individual outcomes, he introduced the concept of “satisficing.” This term merges “satisfy” and “suffice,” reflecting the reality that individuals strive for outcomes that are “good enough” instead of optimal due to limited information and need to balance others’ interests.
Simon’s theory of bounded rationality acknowledges that humans are constrained by cognitive limits—they cannot process all the necessary information to make fully rational decisions. Consequently, they utilize available information to achieve satisfactory results. In addition to cognitive limits, Simon explored the impact of personal relationships and social organizations in shaping decision-making. Individuals often consider multiple interests and abide by institutional rules rather than solely focusing on their own utility maximization.
Bounded rationality thus incorporates these cognitive and social boundaries in the decision-making process, acknowledging that while decisions may not be perfectly rational, they still involve comparing costs, benefits, and risks. This theory has also become a cornerstone of behavioral economics, questioning the rationality of human decision-making in general.
Simon’s significant contributions in this domain led the Royal Swedish Academy of Sciences—when awarding him the Nobel Prize—to note that his ideas form the basis of modern business economics and administrative research. He shifted the perception of entrepreneurs from all-knowing profit maximizers to cooperative decision-makers constrained by various limitations.
Herbert A. Simon and Artificial Intelligence
As a revered figure in artificial intelligence, Simon’s explorations in this field started in the mid-1950s. Collaborating with Allen Newell of the Rand Corporation, the duo embarked on simulating human decision-making using computers. In 1955, they created a revolutionary computer program capable of proving mathematical theorems, which they referred to as their “machine that thinks.”
Simon’s diverse interests and pioneering ideas have left an indelible mark on multiple disciplines, from economics to computer science. His work continues to influence contemporary research and practical applications in various fields.
Related Terms: bounded rationality, satisficing, behavioral economics, artificial intelligence.
References
- Nobel Prize Committee. “Herbert A. Simon - Biographical”,
- Association for Computing Machinery. “Herbert (Herb) Alexander Simon”,
- National Science Foundation. “The President’s National Medal of Science: Recipient Details”,
- Google Scholar. “Herbert A Simon”,
