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1. Introduction



What does it mean to theorize about bounded rationality? Today’s post situates theories of bounded rationality against a competing Standard Picture that came to prominence during the middle of the twentieth century.



2. The Standard Picture



On what Edward Stein (1996) has termed the Standard Picture of rationality, rationality is exhausted by requirements of consistency or coherence. For example, agents may be required to have logically consistent beliefs, probabilistically coherent credences, and preferences satisfying the Savage axioms.



The middle of the twentieth century was a profoundly optimistic period in the study of human rationality. A newly rigorized science of economics took Standard Picture requirements on preference to describe, in rough outline, how humans actually think and act. And although some theorists resisted normative construals of the Standard Picture, increasingly many theorists took Standard Picture axioms as normative requirements. For these theorists, rationality requires agents to satisfy the Standard Picture, and that is more or less what we do.



Mid-century optimism came under assault by a wealth of descriptive evidence suggesting that humans systematically deviate from Standard Picture requirements. For example, we neglect base rates, judge conjunctions to be more probable than conjuncts, and shift judgments and decisions across different framings of the same problem.



We can react to these findings in one of two ways. On the one hand, we can blame the agent. We can retain the Standard Picture as a normative theory and hold that agents who violate Standard Picture requirements are thinking or acting irrationally. Blaming the agent was a common reaction during the turbulent 1970s and 1980s, as optimism gave way to pessimism about human rationality.



On the other hand, we can blame the theory. We can use descriptive violations of the Standard Picture as a guide to identifying normatively relevant considerations which the Standard Picture does not model. In keeping with a wave of recent optimism about human rationality, I suggest that we should sometimes blame the theory.



To see where to start, note that the Standard Picture is architecturally neutral. It requires the same thing of toddlers, teenagers, thirty-somethings and toads. That is surprising because these agents have quite different cognitive architectures. No one would deny that an agent’s physical architecture affects the physical actions that it is rational for her to perform, for example by making some physical actions impossible and changing the effects that others will have. Theories of bounded rationality suggest that we should also take an agent’s cognitive architecture to affect the mental actions that it is rational for her to perform,  for example by making some mental actions impossible and changing the effects that others will have.



3. Bounded rationality



I suggested above that the right reaction to some Standard Picture violations is to blame the theory,  searching for normatively relevant bounds that the Standard Picture does not model. This is a task for theories of bounded rationality.



Traditional theories of bounded rationality make at least five characteristic claims.



First, bounds matter. Paradigmatic cognitive bounds such as limited abilities and the cost of exercising them bear on how it is rational for agents to cognize, just as they bear on the rationality of physical action.



Second,