Herbert their computational abilities, creating the definition of

Herbert Alexander Simon (June 15th, 1916 – February 9, 2001), an American born in Milwaukee and later affiliated with Carnegie Mellon University, received the Nobel prize in economic sciences from the Royal Swedish Academy of Sciences in 1978.  The prize was given for “his pioneering research into the decision-making process within economic organizations” in the field of management science (Nobel Media AB 2014, 2018). However, he was also an academic in other areas of study, most notably economics and business administration, applied mathematical statistics and operation analysis (Nobel Media AB 2014, 2018).Herbert A. Simon’s new research in the field came not from one singular publication, but instead from the papers he published, starting from his doctoral dissertation in political science, which he received in 1942 from the University of Chicago, and continuing onwards to his book and later research; these were based, at least in part, on his previous work (H. A.  Simon, 1991). His book, Administrative Behavior: a Study of Decision-Making Processes in Administrative Organization, was cited in his nobel prize ceremony as being “epoch-making”, laying the groundwork for future research in the field (Nobel Media AB 2014, 2018). H. A. Simon challenged the real-world application and validity of classical decision assumptions (completeness of information, organized preference ordering, and excellent computation skills), behavior, and concept of rationality in many of his papers. He developed a rational behavior concept that was compatible with the individuals’ access to information and their computational abilities, creating the definition of bounded rationality. The word “bounded rationality” and its definition appeared for the first time in one of Simon’s book called “Models of Man: Social and Rational” in 1957 (Klaes and Sent, 2005). However, Simon claimed that the core concept of bounded rationality was already constructed in his earlier article “A Behavioral Model of Rational Choice”, published in the Quarterly Journal of Economics in 1955 (Silveira, 1994, as cited in Barros, 2010).For this, he developed a model for “static” environment, providing a new way of understanding payoffs. Instead of directly maximizing them, he suggested demanding a payoff above a given value, “minimum guaranteed payoff”, as it is more feasible for optimization programs. Furthermore, the concept of sequential decision-making and preference-ordering (an individual doesn’t care that a particular goal can be achieved through other sequences than the one chosen at that particular point)  was introduced as an alternative to the “classical” evaluation of all alternatives before making a choice and selecting the most optimal one (Simon, 1955).Additionally, he extended his theory further to the “dynamic” environment, such as aspiration levels at a particular utility and dynamic changes in the payoff function depending on previous decisions. Through this, he linked his theory to organizational behavior, in which he defined an organism with limited information and ability, in order to optimize the real-life decision-making process. (Simon, 1955).