ABSTRACT
Much of modern economics is concerned with broadening the basic conception of economic action to include such factors as imperfect information and social institutions. But there are two rather divergent approaches to accomplishing this goal. One group, by far the largest, begins with the neoclassical model of rational optimization and then attempts modifications of various sorts in an effort to model social institutions, capture their effects on behaviour, or treat problems of lessthan-perfect knowledge. Another group, influenced by the work of Herbert Simon and a few others, argues that the basic neoclassical model is ill-adapted to the problems of imperfect knowledge and that we need instead a wholly different model of behaviour.
