BOUNDED RATIONALITY AND SIMPLE HEURISTICS

Abstract

This article focuses on the methodological principles and empirical data denying ineffective operation of heuristic judgment (erroneous judgment). It is shown that when people make decisions in every-day situations there is very little possibility of meeting the requirements of normative – rational model. The article describes the principle of bounded rationality and its importance in the description and differentiation of the mental mechanisms determining decision making. Sequential search of information (choice is determined by knowledge obtained by the individual), ensuring equity (the individual has to make an investment when making a choice), availability – by – recall (the individual’s choice is based on the recall of past experience) are reviewed in the context of adjustment to the environment. An emphasis is made on the aspiration level heuristic (the target the individual thinks she/he is able to achieve). The effectiveness of the methods is analyzed from the perspective of the content and composition of the tasks faced by the individual.