Bounded rationality as the cognitive basis for evolutionary economics

Authored by: Richard R. Nelson

Routledge Handbook of Bounded Rationality

Print publication date:  October  2020
Online publication date:  October  2020

Print ISBN: 9781138999381
eBook ISBN: 9781315658353
Adobe ISBN:


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A foundational feature of modern evolutionary economics 1 is its commitment both to a Schumpeterian perspective on modern capitalist economies as dynamic systems, 2 always evolving, with change being driven largely by innovation, and to the proposition developed by Herbert Simon and his colleagues that the behaviors of human and organizational actors should be understood as boundedly rational. 3 The way the presumption that economic actors are boundedly rational is employed in evolutionary economics is consistent in a broad sense with the way that concept has been used in other arenas of research and writing, but the contexts and modes of behavior treated go significantly beyond the more conventional orientation. The objective of this chapter is to explain why and how the presumption of individual and organizational bounded rationality has been used in evolutionary economics.

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