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Bounded rationality, indeterminacy, and the theory of the firm

Article Abstract:

Application of the concept of 'economic rationality' to the theory of the organization of business firms has spotlighted the issues of bounded rationality and indeterminacy. Costly rationality is solely responsible for the decentralization of information processing, decision making and incentives in firms. On the other hand, truly bounded rationality, in partnership with indeterminacy of equilibrium, make the current game-theoretic approach to the theory of the firm both unacceptable and insufficient.

Game theory

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Rationality and the emotions

Article Abstract:

Economists have outright failed to establish the links between emotions and rationality. This, despite the fact that economics should be primarily concerned with the most effective means of providing human satisfaction, which after all comes in the form of emotional experiences. In this light, the role of emotions in sustaining social norm and the role of social norms in regulating emotions are discussed. Moreover, the interlinks between rationality and emotions are discussed.

Emotions

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