ABSTRACT
This chapter discusses the presumption of individual and organizational bounded rationality has been used in evolutionary economics. The problem with the full-blown rational behavior theory of neoclassical economics is that it recognize these caveats, and they are particularly germane in contexts important to evolutionary economics. A foundational feature of modern evolutionary economics is its commitment both to a Schumpeterian perspective on modern capitalist economies as dynamic systems, 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. The range of actions that need to be taken even over a short period of time by an economic actor often is far too great for that actor to be able to think carefully before taking each required action.
