ABSTRACT
In this chapter I make a couple of connected arguments about the status of bounded rationality (henceforth, “BR”) in modern economics and the role of Herbert Simon with respect to understanding this status. Following McCloskey (1983), emphasis is placed on the rhetorical aspects, the attempts to persuade, of scientific development in economics. Following Sent’s (1997) fine study of Thomas Sargent’s (rhetorical) appeal to BR, economists’ actual use of BR is examined. The economists whose use of BR I consider are economists of organization. This choice is far from arbitrary. In his key papers directed at an economics audience (Simon 1978, 1979), Simon made several explicit references to the emerging economics of organization and he himself contributed fundamentally to the neighboring field of organization theory. His examples of BR and its implications usually involved the business firm. Indeed, he sometimes took the notion of “administrative man” to be synonymous with a boundedly rational agent. Perhaps not surprisingly, then, the economics of organization was probably the first sub-field of economics where BR was systematically invoked, and it is perhaps still today the sub-field being invoked with the highest frequency.2
