Bounded Rationality

The Bounded Mind ← Series Home The Illusion of the Perfect Agent For generations, the archetypal manager was envisioned as a perfectly rational agent: a decision-maker equipped with flawless logic, infinite time, and endless computational capacity, whose sole aim was to maximize utility. This ideal, often rooted in classical economic models, placed instinct, emotion, and intuition in a corner of shame, separate from the pristine domain of analysis. Yet, the experience of modern leadership—especially amidst tsunami-like spikes of volatility, uncertainty, complexity, and ambiguity (VUCA), such as the 2020 pandemic—has rendered this classical image obsolete. We all possess the capacity to think, much as we know how to run, but aiming to win a marathon rather than merely catching a bus requires a structured method to upgrade our processes. The central paradox facing the contemporary manager is reconciling the myth of unbounded, flawless calculation with the messy reality of the “bounded mind”. The question is not whether we can achieve perfect rationality—we cannot—but how we can successfully integrate our inescapable limitations with a disciplined framework. ...

The Architecture of Choice ← Series Home The Scarcity of Attention The world of our hunter-gatherer ancestors was brutal, yet in one critical aspect, it was elegantly simple: survival left little room for contemplation of myriad options. When they ran out of game, they hunted; they ate whatever they could gather before it spoiled; and the extraordinarily violent nature of their environment meant few individuals worried about future careers or retirement savings. Their lives, though harsh, put relatively few cognitive demands on their brains. ...