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Criticizing the standard (neoclassical) optimization model in
economics, several years ago Herbert Simon (1978) argued that:
In the past economics has largely ignored the process that
rational man uses in reaching his resource allocation. This was
possibly an acceptable strategy for explaining rational decision
in static, relatively simple problem situations where it might
be assumed that additional computational time or power could not
change the outcome. The strategy does not work, however, when we
are seeking to explain the decision maker's behavior in complex,
dynamic circumstances that involve a great deal of uncertainty,
and that make demands upon his attention. (p. 14) Simon then
urges economists to give an account of substantive rationality,
as well as procedural rationality in light of human cognitive
powers and limitations. While conventional theory assumes that
economic agents respond