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The B.E. Journal of Theoretical Economics

Editor-in-Chief: Schipper, Burkhard

Ed. by Cervellati, Matteo / Fong, Yuk-fai / Peeters, Ronald / Puzzello , Daniela / Rivas, Javier

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Satisficing: A 'Pretty Good' Heuristic

Jonathan Brodie Bendor1 / Sunil Kumar2 / David A Siegel3

1Stanford University,

2Stanford University,

3Florida State University,

Citation Information: The B.E. Journal of Theoretical Economics. Volume 9, Issue 1, ISSN (Online) 1935-1704, DOI: 10.2202/1935-1704.1478, March 2009

Publication History

Published Online:
2009-03-31

One of the best known ideas in the study of bounded rationality is Simon's satisficing; yet we still lack a standard formalization of the heuristic and its implications. We propose a mathematical model of satisficing which explicitly represents agents' aspirations and which explores both single-person and multi-player contexts. The model shows that satisficing has a signature performance-profile in both contexts: (1) it can induce optimal long-run behavior in one class of problems but not in the complementary class; and (2) in the latter, it generates behavior that is sensible but not optimal. The model also yields empirically testable predictions: in certain bandit-problems it pins down the limiting probabilities of each arm's use, and it provides an ordering of the arms' dynamical use-probabilities as well.

Keywords: satisficing; heuristics; bounded rationality

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