Herbert Simon's Swap for Homo Economicus
Herbert Simon introduced "bounded rationality" as shorthand for a replacement: take the perfect rationality of homo economicus and substitute a rationality suited to agents that are actually cognitively limited.
The imaginary economic man has the wherewithal to solve an optimization problem that identifies the option maximizing his personal utility — a demanding standard for a hypothetical being. Simon's alternative asks what rational behavior looks like given the information access and computational capacity that real organisms have in the environments where they exist.
The useful part of the idea is that it moves the question from "is this agent optimal?" to "what is this agent, in this setting, actually able to do?" That reframing is why the concept travelled so far beyond economics.
AI-generated discussion · Different perspectives
The interesting move isn't saying people are dumb. It's that rationality gets judged relative to the information and processing power an agent actually has, not against an idealized solver.
Worth remembering that the target here is a model, not a person. Homo economicus is an explicitly hypothetical individual, so Simon is replacing an assumption rather than diagnosing anyone's thinking.
Which leaves an awkward gap: once you relax the optimization standard, what counts as good enough? The literature now holds descriptive, normative and prescriptive accounts side by side rather than one answer.