Herbert A. Simon, 1916-2001

Photo of H.A.Simon

Pioneer of behavioral economics.

There are many that claim that Herbert A. Simon has precipitated something like a revolution in microeconomics. This revolution is in the concept of "decision-making" in organization and under uncertainty, which he claims is far away from the "rational man" often assumed in mainstream microeconomics. He is certainly not the first one to come up with this critique, but he is by far the best known in this regard - and won a Nobel Memorial prize for it in 1978.

Herbert Alexander Simon was trained at the University of Chicago, obtaining his BA in 1936 and a Ph.D. in political science in 1943.  From 1949, Simon was a professor of administration and psychology and eventually also computer science at the Carnegie Institute of Technology (now Carnegie-Mellon). 

Simon actually started his economic life at the Cowles Commission and some of his first few contributions were in that vein. Of notable importance was his 1949 article unveiling the "Hawkins-Simon" conditions for non- negative square matrices.

Simon subsequently began working on industrial organization and, among the various things he found, already announced in his early 1947 work, was that both the internal organization of firms and the external business decisions of firms seems to conform poorly with the Neoclassical theories of "rational" decision-making. In an avalanche of articles and books since the 1950s, Simon has focused much of his attention on the issue of decision-making - and has come up with a behavioral theory based on "bounded rationality". Agents, he claim, face uncertainty about the future and costs in acquiring information in the present. These two factors, thus, limit the extent to which agents can make a fully rational decision. Thus, Simon claims, they have only "bounded rationality" and are forced to make decisions not by "maximization" by "satisficing", i.e. setting an aspiration level which, if achieved, they will be happy enough with, and if they don't, try to change either their aspiration level or their decision. These "rules of thumb" are the utmost agents can achieve in the "bounded" and uncertain real world.

Simon has backed up much of his work with numerous studies on decision-making in business enterprise. Out of this, the "new" theory of the firm as a "satisficing" as opposed to "maximizing" agent has begun to take hold in industrial organization. In general, Simon's theories of bounded rationality have become an integral part of the so-called "New Institutionalist Economics".  

Herbert Simon went beyond economics to psychology and computer science, in pursuit of his grand goal of understanding not only human decision-making in organizations, but the nature of thinking itself.  In Simon's view, the human mind is "wonderful, but not incomprehensible", and thoughtful decisions - rational, bounded, intuitive and/or creative - can be modeled.  For his efforts in computer science and artificial intelligence, Simon received the Turing Award in 1975 along with his frequent co-writer Allen Newell.

 

Major Works of Herbert A. Simon

  • "Effects of Increased Productivity Upon the Ratio of Urban to Rural Population", 1947, Econometrica.
  • Administrative Behavior: A study of decision-making processes in administrative organization, 1947.
  • "Some Conditions of Macroeconomic Stability", with D. Hawkins, 1949, Econometrica.
  • "A Formal Theory of the Employment Relationship", 1951, Econometrica. [cwls]
  • "Effects of Technological Change in a Linear Model", 1951, in Koopmans, editor, Activity Analysis of Production and Allocation.
  • "A Comparison of Organisation Theories", 1952, RES. [cwls]
  • "On the Application of Servomechanism Theory in the Study of Production Control", 1952, Econometrica. [cwls]
  • "A Formal Theory of Interaction in Social Groups", 1952, American Sociological Review.
  • "The Logic of Causal Relations", 1952, J of Philosophy [cwls]
  • "Some Strategic Considerations in the Construction of Social Science Models", 1954, in Lazarsfeld, editor, Mathematical Thinking in Social Sciences.
  • "The Control of Inventories and Production Rates: A survey", with C.C. Holt, 1954, Journal of Operations Research Society.
  • "Spurious Correlation: A Causal Interpretation", 1954, JASA [cwls]
  • "The Linear Decision Theory for Production and Employment Scheduling", with F. Modigliani and C.C. Holt, 1955, Management Science.
  • "A Behavioral Model of Rational Choice", 1955, QJE. [cwls]
  • "Rational Choice and the Structure of the Environment", 1956, Psychological Review.
  • Models of Man, 1956. - summary
  • "A Comparison of Game Theory and Learning Theory", 1956, Psychometrika.
  • "Observation of a Business Decision" with R.M. Cyert and D.B.Trow, 1956, J of Business.
  • "The Compensation of Executives", 1957, Sociometry.
  • "The Role of Expectations in an Adaptive or Behavioristic Model", 1958, in Bowman, editor, Expectations, Uncertainty and Business Behavior.
  • Organizations, with J.G. March, 1958.
  • "Heuristic Problem Solving: the next advance in operations research" with A. Newell, 1958, Operations Research [pdf]
  • "Theories of Decision-Making in Economics and Behaioral Science", 1959, AER.
  • Planning Production, Inventories and Work Force, with C.C. Holt, F. Modigliani and J. Muth, 1960.
  • "Simulation of Individual and Group Behavior", with G. Clarkson, 1960, AER.
  • The New Science of Management Decision, 1960.
  • "Computer Simulation of Human Thinking" with A. Newell, 1961, Science [pdf]
  • "Aggregation of Variables in Dynamic Systems", with A. Ando, 1963, RES.
  • "The Architecture of Complexity", 1962, Proceedings of American Philosophical Association.
  • "New Developments in the Theory of the Firm", 1962, AER.
  • "Economics and Psychology", 1963, in Koch, editor, Psychology.
  • "Rationality", 1964, in gould and Kolb, editors, Dictionary of Social Sciences.
  • "Decision-Making as an Economic Resource", 1965, in Seltzer, editor, New Horizons of Economic Progress.
  • The Shape of Automation of Men and Management, 1965.
  • "The Impact of the New Information-Processing Technology", 1966, Economy.
  • "Programs as Factors of Production", 1967, Proceedings of Industrial Relations Research Association
  • The Sciences of the Artificial, 1969
  • "Information Storage as a Problem in Organizational Design", 1970, in Goldberg, editor, Behavioral Approaches to Modern Management.
  • "Human Problem-Solving: the state of the theory in 1970", with A. Newell, 1971, American Psychologist [pdf]
  • "Theories of Bounded Rationality", 1972, in Radner and Radner, editors, Decision and Organisation.
  • "Technology and Environment", 1973, Management Science.
  • "Computer Science as Empirical Inquiry: Symbols and search",  with Allen Newell, 1975/76, Communications of the ACM [turing]
  • "From Substantive to Procedural Rationality", 1976, in Latsis, editor, Method and Appraisal in Economics.
  • Models of Discovery, 1977.
  • "Rationality as a Process and ad as Product of Thought", 1978, AER.
  • "How to Decide What to Do", 1978, Bell JE.
  • Models of Thought, 1979.
  • "Rational Decision Making in Business Organizations", 1979, AER. [nobel]
  • Models of Bounded Rationality, 2 volumes, 1982.
  • Reason in Human Affairs, 1983.
  • "Decision Making and Problem Solving", 1986, Research Briefings, NAS [online]
  • "Invariants of Human Behavior", 1990, Annual Review of Psychology [pdf]
  • "Whether Software Engineering Needs to be Artificially Intelligent", 1986 IEEE Trans. on Software Engineering - summary 
  • "Organizations and Markets", 1991, JEP.
  • "The Game of Chess" with J. Schaeffer, 1992, in Aumann and Hart, eds., Handbook of Game Theory, v.1
  • "Scientific Discovery as Problem Solving", in Egidi and Marris, editors, Economics, Bounded Rationality and the Cognitive Revolution.
  • "Literary Criticism: A Cognitive Approach", 1995 Stanford Humanities Review [online]
  • An Empirically Based Microeconomics, 1997 
  • "What We Know About Learning" (speech at Pittsburgh) [online]

 


HET

 

Resources on Herbert A. Simon

  • Herbert Simon's faculty homepages at Carnegie-Mellon (links now defunct but preserved here for sentimental reasons, a reminder of Simon's intellectual range)
    • Simon's page at Carnegie-Mellon (Graduate School of Industrial Administration).
    • Simon's page at Carnegie-Mellon (Computer Science Dept.)
    • Simon's page at Carnegie-Mellon (Psychology Dept.)
    • Simon's page at Carnegie-Mellon (Philosophy Dept.)
    • Simon's page at Carnegie-Mellon (Human-Computer Interaction Institute.)
  • Herbert Simon collection at Carnegie-Mellon library
  • 1978 Nobel Memorial Prize website: press release, facts, autobiography, lecture 
  • 1975 A.M. Turing Award website: Simon entry
  • "Review of Simon's Reason in Human Affairs",  by Andrew Schotter,1985, JEBO [pdf]
  • "Herbert Simon Recalls Berkeley and the Birth of Administrative Behavior", 1991, Public Affairs Report [pdf]
  • "Herbert Simon: Thinking Machines: Interview", 1994, Omni Mag [online]
  • "CMU's Simon reflects on how computers will continue to shape the world", article at Pittsburgh PG News, 2000
  • Herbert Simon's Gaus Lecture, 2000 [video1, vid2, vid3]
  • "A Tribute Herbert Simon" memorial tribute at Carnegie-Mellon (Computer Science Dept.), including bibliography, etc.
  • "Herbert A. Simon: A family memory" by Katherine Simon Frank, 2001 [online]
  • Herbert Simon memorial page at Carnegie-Mellon (Psychology Dept.)
  • "In Memorium: Nobel Laureate Herbert A. Simon Dies at Age 84", Carnegie-Mellon (copy)
  • Herbert Simon memorial note at APS
  • Herbert Simon obituary at Pittsburgh Post-Gazette
  • Herbert Simon obituary at NY Times
  • Herbert Simon obituary at The Economist
  • Herbert Simon obituary at PR newswire
  • Herbert Simon obituary at LA Times
  • Herbert Simon biography at Informs
  • "Biographical Memoir: Herbert A. Simon, 1916-2001" by Mie AUgier and Edward Feigenbaum, 2001, Proc of American Philosophical Society [pdf]
  • "Sublime Simon: The consistent vision of economic psychology's Nobel laureate", by Mie Augier, 2001, J of Economic Psychology [pdf]
  • "A Life of the Mind: Remembering Herb Simon" by David Klahr and Kenneth Kotovsky, 2001, APS Observer [online]
  • "Herbert A. Simons: the science of the artificial" by Fernand Gobet, 2001 [pdf]
  • "Herbert Simon's Decision-Making Approach: Investigation of Cognitive Processes in Experts" by G. Campitelli and F. Gobet [pdf]
  • "Heuristic for Scientific Discovery: the legacy of Herbert Simon" by Pat Langley [pdf]
  • "Towards Design Theory and Expandable Rationality: The unfinished program of Herbert Simon" by Armand Hatchuel, 2002, J of Management and Governance [pdf]
  • Herbert A. Simon: The Bounds of Reason in Modern America by Hunter Crowther-Heyck, 2005
  • "Simon: Design as a Problem-Solving Activity" by Willemien Visser, 2010 [pdf]
  • "Bridging the Gap: Where Cognitive Science Meets Literary Criticism", 1995, Stanford Humanities Review [online]
  • "Problem Solving" by Kevin Dunbar, 1998 [pdf]
  • "Bounded Rationality and Political Science: Lessons from public administration and public policy", by Bryan D. Jones, 2003, J of Public Admin. Research and Theory [pdf]
  • "Ch. 7 -Swimming Against the Stream. Herbert Simon, Harvey Leibenstein, George Shackle, Friedrich von Hayek" by Roger Frantz, 2005, Two Minds: Intuition and Analysis in the history of economic thought [pdf]
  • "Herbert Simon" by Roger Frantz and Leslie March, 2015, Real World Decision-Making: Encyclopedia of Behavioral Sciences [pdf]
  • Citation from 1988 John von Neumann Theory Prize from INFORMS
  • Herbert A. Simon Visiting Scholar program at Carnegie-Mellon
  • Herbert Simon brief overview  at Carnegie-Mellon
  • "ASIS Conjures Information Future", 1998, Library Journal 
  • "Herbert Simon and Chunking" by David Wiles [online]
  • Herbert Simon's Theories of Intelligence [online]
  • "Herbert Simon on Resource Dependency Theory" by Keith Rollag [online]
  • "Herbert Alexander Simon" by Jean Zhao
  • Simon bibliography
  • Simon page (Portuguese)
  • Simon Page at Nobel Prize Internet Archive
  • "Herbert Simon" article at the Economist, 2009
  • Simon entry at Concise Encycl of Economics, LibertyFund
  • Simon entry at Britannica
  • Wikipedia

 

 

 

All rights reserved, Gonçalo L. Fonseca
 

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