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Herbert Simon

Limited rationality is the term coined by H. Simon. His research about decision-making behaviour and decision-making foundations have made it acceptable to represent the view that people do not decide based on complete information. We decide when we feel sufficiently secure. For proving this observation, Simon received the Nobel price. The world is too fast, too obscure, too confused, exposed to too many influences to be able to comprehensively calculate which decision is worth making in the end. We decide when we are satisfied. With this, Simon principally questions the standard model of economics, that stakeholders, in their negotiations, make rational choices based upon complete information. Psychologists always knew that this is nonsense. People fear loss more than they desire gain, they often act in order to reduce anxiety, not in order to reach goals, they have unknown, unconscious motives. All this did not occur in economics and is, to this day, not entirely accepted. Simon’s contribution of questioning this fatal illusion has been indispensable.