Rationality, Imagination and Intelligence : Some Boundaries in Human Decision-Making

This paper explores the concept of 'bounded rationality' by contrasting it to notions of rationality that are not bounded. It mainly attempts to deepen understanding of the concept by outlining and comparing different versions of 'bounded rationality', in this case the versions of Herbert A. Simon, George Shackle and James G. March. Simon is the 'father' of procedural rationality, at least in modern times. His ideas, and those of his Carnegie School colleagues, about bounded, or limited, rationality enable recognition of the importance of behavioral and cognitive incompleteness. Shackle was a loner in economics because he took seriously the importance of time, not in a mathematical but in a psychological sense. The paper will exploit his ideas to argue the importance of imagination as an integral part of human decision-making. Finally, March is known for his more irrational models of human decision-making. The pursuit of intelligence in the longer run requires us occasionally to betray the canons of rationality in the short run. These three sets of ideas lead to different versions of bounded rationality: procedural, aesthetic and retrospective rationality respectively