Write down the conditions required framing for new IT set-ups (company) through Herbert Simon's Models - Attributes of information and its relevance to Decision Making in India?
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Explanation:
Herbert A. Simon was the self-proclaimed, and proclaimed, "prophet of bounded rationality" (Simon, 1996, p. 250; and Sent, 1997, p. 323). In spite of the tone of such statement, it is beyond doubt that, in economics at least, the concept of bounded rationality is firmly associated with Simon's name, and conversely, and that his authority is, time and again, employed to buttress the use of the concept that is being done, nowadays in a relatively more frequent fashion, by diverse strands in the field of economic science.
Although Simon was part of the chorus of critics to the concept of global rationality from the early beginnings of his career, a more precise conceptualization, and even the term bounded rationality date from the mid-fifties. According to Klaes and Sent (2005), in all likelihood, the term first appears in print in the 1957 book Models of man, social and rational. As far as I know of, this is indeed the precise date of "birth" of bounded rationality. According to Simon himself, the position was already clearly outlined in a paper not much antecedent, and which was included in the 1957 book (Simon, 1955; about this, see Silveira, 1994, p. 73). As a matter of fact, by this time, the concept had already the form and basic content it has up to today: the incapacity of exercise of global rationality makes the economic agents beings endowed with a bounded rationality. However, Simon, along his long lasting and prolific career, would advance much towards specifying his conception of rationality. One of the most important steps in this direction was the concept of procedural rationality (Simon, 1976b), proposed little before he was awarded the Nobel Prize, in 1978. To my judgement, procedural rationality has the ability to synthesize very adequately Simon's view of rationality. Nevertheless, this second general concept of rationality has nowadays a much less marked presence in the economic science field and, as far as I know of, never had such a wide penetration as the concept of bounded rationality.1
In this paper, I argue the following. First, that the concept of bounded rationality is characterized, above all, by its low degree of specificity. Second, that this characteristic can explain much of the (relative) current popularity of the concept. In the third place, I argue that Simon's remaining main contributions to the debate on rationality and economic behavior, including the ones preceding 1976, can be grouped under the term "procedures" and, therefore, his behavioral theory is based on procedural rationality. In other words, it is the case of treating the concept of procedural rationality as the one that best expresses Simon's view of rational behavior, to the detriment of bounded rationality, which mostly plays a critical role to mainstream economics. This paper is composed, besides this introduction, of four more sections. The second section discusses the concept of bounded rationality aiming at defining it and at pointing some of its important characteristics. The third section presents the concept of procedural rationality so that, in founth section, we can discuss the relation between these two general concepts of rationality advanced by Simon. Special attention is dedicated to the historical chronology of the construction of these concepts by the author, bearing in mind that this chronological ordering helps in making clearer the logical relation between them. Finally, in the fifth section some final considerations are made.