Modelling Bounded Rationality in Organizations: Progress and Prospects

Puranam, P and Stieglitz, N and Osman, M and Pillutla, M (2015) Modelling Bounded Rationality in Organizations: Progress and Prospects. Academy of Management Annals, 9 (1). pp. 337-392.

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Abstract

AbstractMuch of the formal modelling work in the organizational sciences relies on Herbert Simon's conception of bounded rationality, and it stakes a claim to drawing on behaviorally plausible assumptions about human behavior and action in organizations. The objectives of our review are threefold. First, we summarize the formal literature by “model families”—classes of models sharing the same analytical structure—to highlight sharply the behavioral assumptions being made. Specifically, we discuss model families involving (a) adaptation through search and learning by individual agents, (b) mutual adjustment of interacting agents, and (c) information aggregation in organizational decision-making. Second, we examine to what extent these models of bounded rationality in organizations are in fact consistent with the behavioral evidence in psychology and other related fields. Finally, we discuss opportunities for further research that strengthens the links between formal modelling in organizations research, and its behavioral foundations. In particular, we highlight the promise of experimental methods that translate organizational models to multiple-subject experiments in the behavioral laboratory.

Affiliation: Indian School Business
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ISB Creators
ORCiD
Pillutla, M
https://orcid.org/ 0000-0001-5529-5094
Item Type: Article
Additional Information: The research article was published by the author with the affiliation of London Business School
Uncontrolled Keywords: Modelling, Bounded Rationality
Subjects: Organization Behavior
Depositing User: Gurusrinivasan K
Date Deposited: 25 Sep 2021 12:56
Last Modified: 25 Sep 2021 12:56
URI: https://eprints.exchange.isb.edu/id/eprint/1552
Publisher URL: https://doi.org/10.5465/19416520.2015.1024498
Publisher OA policy: https://v2.sherpa.ac.uk/id/publication/29585
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