Economics, Bounded Rationality and the Cognitive Revolution.

• Author: Mirowski, Philip

Economists do seem incapable of understanding what makes Herbert Simon tick (not a dead metaphor in this instance, as this book illustrates). The participants at the Cowles Commission didn't quite know what to make of him in its Chicago years; and the questions put to him at a Colloquium held at Turin in 1988 (and reproduced here) evoke nothing so much as the proverbial blind men and the elephant. Probably many of the missed connections have to do with the fact that most economists come equipped gratis with the conviction they have something cogent to say about "rationality" (as Robin Marris notes herein). Luckily, a good third of this book is vintage Simon reprinted, so the reader has a better than average chance to work out the relationship of the life's work of Simon to artificial intelligence and economics for themselves. Those who sum up his work with a few catch-phrases about satisficing and bounded rationality are probably in for a shock. Herbert Simon will go down in history books as one of the founders of the burgeoning field of artificial intelligence. Lack of familiarity with the history of this field is the first major source of economists' misapprehensions.(1) The second obstruction to our understanding is lack of familiarity with the problems of justifying the use of mathematics in the social sciences after the bombshell of Godel's theorem in the 1930s.(2) Very crudely, three responses to the crisis of the legitimacy of mathematics in economics were represented at Cowles in the 1950s: the Koopmans/Debreu version of Bourbakist axiomaticization; Von Neumann's attempt to model the structure of the brain, which encompassed game theory; and Simon's move towards artificial intelligence. Although all were fundamentally methodologically individualist, and invested their hopes in the mathematicization of economics as the vehicle to endow it with scientific status, each displayed extremely divergent characterizations of human rationality. The indiscriminate mixing and matching of these clashing strains of theory in part explains the present Tower of Babel quality of economic discussions of rationality.

Simon was opposed to the neoclassical model from a very early stage of his career, and still is, as documented here. What is less well known is that he was also one of the very earliest critics of von Neumann and Morgenstern's magnum opus. How, then, was he accorded any hearing amongst economists, in contrast to so many other disgruntled...