The problem of bounded rationality, yes it's actually a problem!

in #philosophy4 years ago (edited)


"sapientia est potentia"


The question of how to make a good rational decision in some ways has been answered at least in literature. Rational choice theory, decision theory, risk to benefit analysis, debiasing, all go into making high quality decisions if you are pursuing a particular goal or outcome.

Ignorance is the lack of knowledge. The lack of knowledge could be the result of being uninformed, misinformed, disinformed. Ignorance is purposefully spread in societies around the world. Sometimes this ignorance is spread in the pursuit of political objectives and other times that ignorance is spread in the pursuit of business objectives but in either case there is a deliberately perpetuated culture of ignorance.

What is rational choice theory? To understand what rational choice theory is we must first understand what a rational agent is. A rational agent has preferences, and actions depend on preferences of the agent, the information the agent has about it's environment including past experiences, the actions, dues and obligations available to the agent, the estimated or actual benefits and the chances of success of the actions.

In order for a rational agent to make a rational decision the rational agent must overcome certain limitations. Human beings are not rational agents because human beings have human limitations which constrain the ability of a human being to be rational. This could be a limit to the access of information about the environment, but in that case even an artificial intelligence would have a difficult time. On the other hand, human beings have innate biases and take mental shortcuts and this represents what bounded rationality is.

Firms, corporations, DACs, DAOs, intelligent agents, all can be rational agents.

Bounded rationality makes consequence based decision making difficult

Bounded rationality is what makes utilitarianism or consequentialism very difficult. In order to make a consequence based decision, without being negatively influenced, the individual requires access to high quality (true) information. In addition, a person would also need an ability to debias because bias can influence decisions subliminally. Subconscious decisions are made quicker but because they are subconscious decisions they are susceptible to bias.

There are ways around bias. Debiasing can be done through software, hardware, or through processes. At the same time debiasing is not easy and it's very difficult to separate that bias from human decisions.

Knowledge is power and it can command obedience. A man of knowledge during his lifetime can make people obey and follow him and he is praised and venerated after his death. Remember that knowledge is a ruler and wealth is its subject. — Imam Ali, Nahj Al-Balagha, Saying 146


  1. Gigerenzer, G., & Selten, R. (2002). Bounded rationality: The adaptive toolbox. MIT press.

I like the choice of subject, but it needs a story to it. Paint a scenario, short story-style, to illustrate your point. I think that'll engage more viewers.