Essay: A Behavioral Model of Rational Choice

Overview
Herbert Simon presents a practical and empirically oriented reconception of rational choice, arguing that the ideal of unbounded utility maximization is unrealistic for real decision makers. He proposes "bounded rationality" as a descriptive alternative: decision makers aim for satisfactory solutions given limits on knowledge, time, and computational capacity. The essay articulates how these constraints shape choice behavior and how more realistic decision rules can be formalized and studied.
The piece emphasizes behaviorally grounded assumptions and process-level descriptions rather than abstract, omniscient optimization. Simon frames choice as an adaptive, procedural activity where cognitive limitations, environmental structure, and organizational arrangements interact to produce decisions that are good enough rather than globally optimal.

Critique of Classical Rationality
Simon challenges the classical economic model that treats agents as fully informed, infinitely calculating optimizers. He points out that maximizing expected utility presumes access to complete information, stable preferences over an exhaustive set of alternatives, and the computational ability to evaluate and compare every option. These premises are empirically dubious when applied to humans or organizations operating in complex, uncertain environments.
Rather than dismissing the normative elegance of optimization, Simon interrogates its descriptive relevance. He shows that the formal apparatus of optimization often rests on idealized assumptions that obscure the actual mechanisms of choice. The critique is aimed at reorienting theory toward assumptions that can be observed, tested, and incorporated into models of behavior.

Bounded Rationality and Satisficing
Central to Simon's account is the concept of "satisficing," a decision rule in which agents search for an option that meets a predetermined aspiration level and then stop. Satisficing contrasts sharply with exhaustive maximizing: it acknowledges limits on search and calculation and models decision makers as satisficers who settle for sufficiently good alternatives instead of the theoretical best. Aspiration levels can change over time and are shaped by past experience, institutional routines, and environmental feedback.
Satisficing integrates cognition and procedure into choice theory. It provides a flexible, testable mechanism for how preferences and choices are formed under constraint. Simon emphasizes that satisficing is not irrational; rather, it is a rational strategy given informational and computational costs, and often yields outcomes close to optimal with much lower resource expenditure.

Decision Processes and Search
Simon describes choice as a sequential search process in which decision makers generate, evaluate, and potentially revise alternatives. The architecture of this search, how options are generated, what stopping rules are used, and how information is gathered, becomes crucial for understanding outcomes. He explores how heuristics and routines serve as adaptive tools to structure search and reduce cognitive demands.
The essay highlights the role of organizational procedures and information-processing structures in shaping individual choices. Organizations can formalize routines that effectively increase the decision-making capacities of their members, thereby altering the bounds within which rationality operates. This links individual cognition to institutional design and explains variation in decision quality across settings.

Methodological and Empirical Emphasis
Simon advocates for building theories that are explicitly tied to observable behavior, laboratory experiments, and institutional realities. He urges social scientists to model the cognitive and informational constraints of agents and to develop formal procedures that capture actual decision processes. This approach favors intermediate-level models that can be empirically evaluated rather than purely abstract axiomatic systems.
By grounding theory in empirical facts about human information processing, Simon opens a pathway for interdisciplinary research connecting psychology, economics, and organizational studies. The emphasis on tractable, testable mechanisms seeks to make social science both more realistic and more useful for understanding and improving decision-making.

Implications and Legacy
The essay reframes rationality as a bounded, procedural concept with profound implications for economic theory, organizational analysis, and public policy. Accepting bounded rationality leads to different predictions about behavior, different policy instruments, and a greater focus on design of choice environments and decision aids. It also legitimizes the study of heuristics, rules of thumb, and satisficing architectures.
Simon's ideas seeded major developments across disciplines, inspiring research on behavioral economics, cognitive psychology, artificial intelligence, and management science. The concept of bounded rationality continues to influence how scholars and practitioners think about decision making under real-world constraints.