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Researchers increasingly take advantage of the comparative case design to build theory, but the degree of case dependence is occasionally discussed and theorized. We suggest that the comparative case study design might be subject to an often underappreciated threat—dependence across cases—under certain conditions. Using research on innovation diffusion as an illustration, we explore the role of social linkages across cases when building theory through comparison and contrast between cases. We develop an agent-based simulation, grounded by comparative case research about innovation diffusion, as novel way to study the implications of case dependence in theory building using multiple-case study research. Our simulation results suggest that the degree of case dependence has a nontrivial bearing on innovation diffusion experienced by case entities, specifically when the researcher draws a few case entities operating in a highly interconnected industry. Under these conditions, overlooking the degree of case dependence might weaken newly built theory against commonly held standards of internal validity and external validity in inductive research. We conceptualize the issue of case dependence as a concern about researchers’ bounded rationality. Accordingly, we build on our findings to provide actionable advice aiming to alleviate this concern while being amendable to the variety of approaches to build theory from multiple cases in social sciences.

A choice behavior is rational if it is made in accordance with the maximization of some context-independent preference relation. This paper re-examines the classical questions of implementation theory under complete information in a setting in which players' choices need not be rational and in which the game theoretic solution concept invoked is robust to coalitional deviations.

It is possible to model trust as an investment game, where a player in order to receive a reward or a better outcome, accepts a certain risk of defection by another player. Despite having achieved interesting insights and conclusions, traditional game theory does not predict the existence of trust between players who are selfish and exhibit maximizing behavior. However, experiments with these games reveal the presence of trust in player decision making. The purpose of this paper is twofold. First, it aims to build an agent-based economic model to show that trust revealed in these experiments can emerge from a simple set of dynamics. Using the generative methodology proposed by Epstein, we introduce natural selection, learning and group formation to the model to verify their impact on the emergence of trust between agents. Second, since the experiments reveal that the participants present bounded rational behavior, the paper aims to show that in an agent-based model, bounded rationality can be modelled through an artificial intelligence algorithm, the learning classifier system (LCS). As a result, we have observed that natural selection favors more selfish behavior. In addition, learning and the forming of groups increased trust in our simulations and they were able to reverse selfish behavior when introduced along with natural selection. The level of trust that emerged from the model with these three dynamics was similar to that observed in these experiments. Finally, it is possible to verify that the LCS was able to model bounded rational behavior in agents.

Problem definition: The existing literature on probabilistic or opaque selling has largely focused on understanding why it is attractive to firms. In this paper, we intend to answer a follow-up question: How should opaque selling be managed in a firm’s operations over time? Academic/practical relevance: Answering this question is relevant yet complex, because in practice (i) the profitability of opaque selling depends on how customers respond to the firm’s product-offering strategies and (ii) the firm’s strategies have to be responsive to customers’ purchasing decisions to maximize its total profit. Methodology: We develop a simple game-theoretic framework to capture the dynamic nature of the problem in multiple periods when customers boundedly rationally expect the firm’s strategies through anecdotal reasoning. We characterize the firm’s optimal pricing and product-offering policy. Results: We find that offering the high-value product with a high probability followed by a lower probability is typically optimal over time. We finally analyze several model extensions, such as different numbers of customers, multiple anecdotes, infinitely many periods, and limited inventory, and show the robustness of our results. Managerial implications: We demonstrate the value of using a dynamic probabilistic selling policy and prove that our dynamic policy can double the firm’s profit compared with using the static policy proposed in the existing literature. In a dynamic programming model, we prove that a cycle policy oscillating between two product-offering probabilities is typically optimal in the steady state over infinitely many periods.

The principle of revealed preference is the backbone of structural empirical work on consumer demand. It focuses on what we can learn about the processes by which economic agents make decisions, using observed choices and minimal auxiliary assumptions. Classical revealed preference methods assume that choices and preferences are stable and consistent, but many studies have found violations of these assumptions both in consumer data and experimental settings. Recent research effort extends far beyond the axiomatic characterization of neoclassical choice models. New behavioural theories explain these violations in a theoretically founded way, considering data consistency and preference recoverability for a wide class of behavioural models. This article reviews some of the themes emerging from the recent literature.

Boston Mechanism (BM) and Deferred Acceptance (DA) are two competing algorithms in school choice. BM is manipulable whereas DA encourages truth-telling. Recognizing heterogeneous sophistication of students, we use the level-k model to analyze students' strategies under BM in a complete information environment with strict school priorities. Because students tend to manipulate first choice under BM, we characterize the first choice reported by students at all possible sophistication levels. In a general framework we show that BM is no less efficient than DA, and in two specific belief settings we further show that it is as if students run DA in their minds when they make level-k reasoning under BM. We compare the relation between sophistication and welfare under BM in the two belief settings to emphasize the role of high sophistication and correct belief. We also compare our results with Nash equilibrium analysis.

In this paper, the competitive equilibrium of the Bertrand game is discussed with bounded rationality and the utility function. When the parameters changing and the number of firms increasing, the competitive equilibrium valve of Bertrand duopoly game is gradually being blurred. When the number of competitors is more than four, it is very difficult to derive the value of the equilibrium points. How to find the general competitive equilibrium points for Bertrand game, which is studied from spatial agglomeration with mean value theorem. A Bertrand duopoly game is proposed based on a demand function. Celestial bodies motion as method is introduced to handle the number and stability of competitive equilibrium points, and the stable points is symmetry. The results are supported by numerical computation and simulations.

This paper examines the computational feasibility of the standard model of learning in economic theory. It is shown that the information update technique at the heart of this model is impossible to compute in all but the simplest scenarios. Specifically, using tools from theoretical machine learning, the paper first demonstrates that there is no polynomial implementation of the model unless the independence structure of variables in the data is publicly known. Next, it is shown that there cannot exist a polynomial algorithm to infer the independence structure, consequently, the overall learning problem does not have a polynomial implementation. Using the learning model when it is computationally infeasible carries risks, and some of these are explored in the latter part of the paper in the context of financial markets. Especially in rich, high-frequency environments, it implies discarding a lot of useful information, and this can lead to paradoxical outcomes in interactive game-theoretic situations. This is illustrated in a trading example where market prices can never reflect an informed trader’s information, no matter how many rounds of trade. The paper provides new theoretical motivation for the use of bounded rationality models in the study of financial asset pricing—the bound on rationality arising from the computational hardness in learning.

In this paper, a Cournot oligopoly with isoelastic demand function and constant marginal cost is considered. The local stability conditions of the Cournot equilibrium are determined for four models with different decision mechanisms. In the first model, firms adjust their outputs using the best reply response with naive expectations. The second model is a generalization of the first one, where firms have adaptive expectations. Meanwhile, the third and fourth models adopt the bounded rationality and local monopolistic approximation, respectively. The results show that, in the case of identical firms, the Cournot equilibrium is always stable when the firms adopt the local monopolistic approximation mechanism.

This paper discusses why in the 1950s Herbert Simon introduced bounded rationality as a modular notion—consisting of a “cognitive” and an “environmental” module—and explores the consequences of thi...

We often make high stakes choices based on complex information that we have no way to verify. Careful Bayesian reasoning—assessing every reason why a claim could be false or misleading—is not feasible, so we necessarily act on faith: we trust certain sources and treat claims as if they were direct observations of payoff relevant events. This creates a challenge when trusted sources conflict: Practically speaking, is there a principled way to update beliefs in response to contradictory claims? I propose a model of belief formation along with several updating axioms. An impossibility theorem shows there is no obvious best answer, while a representation theorem delineates the boundary of what is possible.

Under the assumption that the range of varying uncertain parameters is known, some results of existence and stability of equilibria for population games with uncertain parameters are investigated in this paper. On the basis of NS equilibria in classical noncooperative games, the concept of NS equilibria for population games with uncertain parameters is defined. Using some hypotheses about the continuity and convexity of payoff functions, the existence of NS equilibria in population games is also proved by Fan–Glicksberg fixed point theorem. Furthermore, we establish a bounded rationality model of population games with uncertain parameters, and draw the conclusions about the stability of NS equilibrium in this model by constructing the rationality function and studying its properties.

Consumer valuations are shaped by choice sets, exemplified by patterns of substitution between alternatives as choice sets are varied. Building on recent neuroeconomic evidence that valuations are transformed during the choice process, we incorporate the canonical divisive normalization computation into a discrete choice model and characterize how choice behaviour depends on both size and composition of the choice set. We then examine evidence for such behaviour from two choice experiments that vary the size and composition of the choice set. We find that divisive normalization more accurately captures observed behaviour than alternative models, including an example range normalization model. These results are robust across experimental paradigms. Finally, we demonstrate that Divisive Normalization implements an efficient means for the brain to represent valuations given neurobiological constraints, yielding the fewest choice errors possible given those constraints. This paper was accepted by Elke Weber, judgment and decision making.

This work presents the complexity that emerges in a Bertrand duopoly between two companies in the Greek oil market, one of which is semi-public and the other is private. The game uses linear demand functions for differentiated products from the existing literature and asymmetric cost functions that arose after approaches using the published financial reports of the two oil companies (Hellenic Petroleum and Motor Oil). The game is based on the assumption of homogeneous players who are characterized by bounded rationality and follow an adjustment mechanism. The players’ decisions for each time period are expressed by two difference equations. A dynamical analysis of the game’s discrete dynamical system is made by finding the equilibrium positions and studying their stability. Numerical simulations include bifurcation diagrams and strange attractors. Lyapunov numbers’ graphs and sensitivity analysis in initial conditions prove the algebraic results and reveal the complexity and chaotic behavior of the system focusing on the two parameters k1 and k2 (speed of adjustment for each player). The d-Backtest method is applied through which an attempt is made to control the chaos that appears outside the stability space in order to return to the locally asymptotically stable Nash equilibrium for the system.

In a homogenous product market, customers’ different demand elasticities may lead to different prices. This study examined price discrimination’s effect on equilibrium points in Cournot duopoly games by assuming that each firm charges K prices and adjusts its strategies based on bounded rationality. In consideration of price discrimination, two discrete dynamic game systems with 2K variables were introduced for players with homogenous or heterogenous expectations. The stability of the Nash equilibrium point was found to be independent of price discrimination. Given price discrimination, the stability of boundary stationary points for the system with homogenous players is different from that for the system with heterogenous players. Numerical simulations verified the critical point for the system with homogenous players from being stable to its bifurcation.

We study a Bertrand duopoly game in which firms adopt a gradient-based mechanism to update their prices. In this competition, one of the firms knows somehow the price adopted by the other firm next time step. Such asymmetric information of the market price possessed by one firm gives interesting results about its stability in the market. Under such information, we use the bounded rationality mechanism to build the model describing the game at hand. We calculate the equilibrium points of the game and study their stabilities. Using different sets of parameter values, we show that the interior equilibrium point can be destabilized through flip and Neimark–Sacker bifurcations. We compare the region of stability of the proposed model with a classical Bertrand model without asymmetric information. The results show that the proposed game’s map is noninvertible with type Z 0 − Z 2 or Z 1 − Z 3 , while the classical model is of type Z 0 − Z 2 only. This explains the quite complicated basins of attraction given for the proposed map.

International audience We use the analogy-based expectation equilibrium (Jehiel, 2005) to study cheap talk from a sender who does not perfectly understand all the messages available to him. The sender is endowed with a privately known language competence corresponding to the set of messages that he understands. For the messages that he does not understand, the sender has correct but only coarse expectations about the equilibrium response of the receiver. An analogy-based expectation equilibrium is always a Bayesian solution but usually differs from a standard communication equilibrium and from an equilibrium with language barriers (Blume and Board, 2013). We characterize conditions under which an outcome remains an equilibrium outcome when the sender's competence decreases. Partial language competence rationalizes information transmission and lies in pure persuasion problems, and can facilitate information transmission from a moderately biased sender.

Bounded rationality and practice theory have both become popular theories of action for major strands of work in constructivist and rationalist International Relations (IR). Based on this observation, I make two arguments. The first is that although they underpin what are generally seen as opposed theoretical camps in IR, bounded rationality and practice theory share two fundamental assumptions. They both accept that how agents process information and make decisions depends on where they are situated in social space, and where they stand in historical time. In turn, these shared assumptions imply that they agree on the existence of a common type of change: change in terms of how groups of people process information and make decisions over time. My second argument is that by studying this type of change, it is possible to shed new light on major transformations of international relations, and that one way of engaging in this type of research is to study international practitioners' education over substantial time periods. With these arguments, this article makes a methodological contribution to the study of change in historical international relations and charts a practical course for pluralist dialogue in IR.

Recent research has proposed a statistical test based on the notion that agents have bounded rationality, if and only if more attractive states are chosen with larger probability. We propose and implement a statistical test for bounded rationality in the context of stochastic cost frontiers. Bounded rationality is related to probabilistically cost-efficient distributions. The test is based on comparing a discrete set of probabilities with the theoretical distribution under bounded rationality. Implementation is shown to be quite easy in a Bayesian framework using the Bayes factor for model comparison between estimated and theoretical probabilities. The bounded-rationality model introduces only an extra parameter in frontier models and, therefore, it is quite practical to use in applications as a general semi-parametric model for inefficiency.

Bounded rationality requires assumptions about ways in which rationality is constrained and agents form their expectations. Evolutionary schemes have been used to model beliefs dynamics, with agents choosing endogenously among a limited number of beliefs heuristics according to their relative performance. This work shows that arbitrarily constraining the beliefs space to a finite (small) set of possibilities can generate artificial equilibria that can be stable under evolutionary dynamics. Only when “enough” heuristics are available are beliefs in equilibrium not artificially constrained. I discuss these findings in light of an alternative approach to modelling beliefs dynamics, namely, adaptive learning.

I study a mechanism design problem involving a principal and a single, boundedly rational agent. The agent transitions among belief states by combining current beliefs with up to K pieces of information at a time. By expressing a mechanism as a complex contract—a collection of clauses, each providing limited information about the mechanism—the principal manipulates the agent into believing truthful reporting is optimal. I show that such bounded rationality expands the set of implementable functions and that optimal contracts are robust not only to variation in K, but to several plausible variations on the agent’s cognitive procedure. (JEL D82, D86)

This paper considers a clearing service system where customers arrive according to a Poisson process, and decide to join the system or to balk in a boundedly rational manner. It assumes that all customers in the system are served at once when the server is available and times between consecutive services are independently and identically distributed random variables. Using logistic quantal-response functions to model bounded rationality, it first characterizes customer utility and system revenue for fixed price and degree of rationality, then solves the pricing problem of a revenue-maximizing system administrator. The analysis of the resulting expressions as functions of the degree of rationality yields several insights including: (i) for an individual customer, it is best to be perfectly rational if the price is fixed; however, when customers have the same degree of rationality and the administrator prices the service accordingly, a finite nonzero degree of rationality uniquely maximizes customer utility, (ii) system revenue grows arbitrarily large as customers tend to being irrational, (iii) social welfare is maximized when customers are perfectly rational, (iv) in all cases, at least 78% of social welfare goes to the administrator. The paper also considers a model where customers are heterogeneous with respect to their degree of rationality, explores the effect of changes in distributional parameters of the degree of rationality for fixed service price, provides a characterization for the revenue-maximizing price, and discusses the analytical difficulties arising from heterogeneity in the degree of bounded rationality.

Manzini and Mariotti (2014) define the menu-independent random consideration set rule, where the decision maker considers each alternative with a menu-independent probability known as the attention function. We relax the assumption of menu-independence and allow for any restriction to be imposed on the attention function. We show that there is an equivalence between the attention function and the hazard rate. This equivalence is used to characterize the menu dependent random consideration set rules that correspond to (i) specific conditions on the probability rule, and (ii) different stochastic choice models from the literature.

Centipede games represent a classic example of a strategic situation, where the equilibrium prediction is at odds with human behavior. This study is explicitly designed to discriminate among the proposed explanations for initial responses in centipede games. Using many different centipede games, our approach determines endogenously whether one or more explanations are empirically relevant. We find that non-equilibrium behavior is too heterogeneous to be explained by a single model. However, most non-equilibrium choices can be fully explained by level-k thinking and quantal response equilibrium but each model for different subjects. Preference-based models play a negligible role in explaining non-equilibrium play.

블록체인 생태계의 혁신을 촉진하는 암호화폐가 여러 목적을 위해 발행됨에도 불구하고, 투자자들은 암호화폐를 시세 차익의 수단으로만 인식한다. 이는 암호화폐의 투기적 측면만을 부각해 암호화폐가 발행되는 근본적인 목적이 무시되고, 블록체인 생태계의 혁신을 방해한다. 본 연구에서는 암호화폐 투자자들의 투기적 행동 원인을 학문적 관점에서 규명한다. 개인들이 기존 주식, 벤처 투자 시 사용하는 의사결정 기준을 통합하고 암호화폐 투자 시 고려해야 할 기준을 추가해 통합하였다. 확립된 모델을 바탕으로 암호화폐에 대한 그릇된 인식의 원인을 제한된 합리성 이론으로 뒷받침한다. 의사결정 기준 정립을 위해 전통적인 벤처 및 엔젤 투자자들이 투자 의사결정 시에 사용하는 변수를 차용하고, 암호화폐 속성을 반영하기 위해 백서의 목차에서 나타난 키워드를 수집하여 암호화폐 투자에 적용 가능한 새로운 변수들을 도출하였다. 본 연구는 Simon이 제시하는 제약들로 인해 개인들이 암호화폐를 투기의 수단만으로 인식하고, 생태계의 건전성을 저해하는 비합리적인 의사결정을 행할 수밖에 없게 된다는 것을 설명한다. 이를 위해 우리는 제한된 지식과 불완전한 정보의 제약을 바탕으로 나누어진 표본이 내린 의사결정에서 합리성의 유의미한 차이가 있는지 분석한다. 그 결과, 불완전한 정보는 투자자들이 비합리적인 기준만을 고려하도록 야기했다. 이 결과로부터, 본 연구는 개인들의 합리적인 투자와 블록체인 생태계의 발전이 함께 추구되기 위해 정보 비대칭이 완화되어야 할 필요가 있음을 시사한다. 또한, 산업이 개인 투자자들의 의사결정에 대하여 더 나은 이해를 가능하게 함으로써, 추후 ICO에서 성공적인 자금 조달이 가능하도록 전략적 인사이트를 포착할 수 있다.

How effective is the taken R&D investment decision, considering the effect of bounded rationality? Guided by this question, it is explored the decision-making process at the group level within the firm. A mathematical model for determining the effectiveness of decision-making based on the group’s experience is proposed. By considering subjective and objective factors, the Decision-making Effectiveness Index – Dei, model was created. To prove theoretical hypotheses and testing the model, a randomly generated dataset was built consisting of 4,000 individuals that were grouped representing 500 hypothetical firms. After performing the simulation, both hypotheses were confirmed, and the model was validated. The main theoretical findings evidenced that the project’s success will depend on decision-makers' cognitive capacity. As a contribution for practitioners, this research highlighted the importance of considering group experience in a self-analysis effectiveness index. Procedures are proposed for comparing the firm effectiveness index with competitors for improving firm decision-making performance.

The article considers the “behavioral” modification of the standard DSGE model proposed by X. Gabaix. In his model, agents behave in a boundedly rational manner, showing incomplete attention to macroeconomic statistics. Moreover, unlike other attempts to abandon the hypothesis of rational expectations in favor of a model of adaptive and/or static expectations, the Gabaix model is initially constructed taking into account the inattention of economic agents to macro variables. The consequence of bounded rationality is that monetary policy is less effective (compared to the model of rational expectations) and, conversely, fiscal policy is effective due to the fact that Ricardo equivalence is not fulfilled. If the inertia of inflation expectations is taken into account in the Gabaix model, it demonstrates that the interest rate has a positive effect on inflation in the long run. Bayesian estimates for the rationality coefficient in the Russian economy are presented. Moreover, attention to inflation is much lower than attention to the variable of economic activity.

Bounded rationality is a key concept with implications across all areas of economics. To help students better understand the nature, causes and forms of bounded rationality in individual choice, th...

This paper aims at studying a new kind of stable population games introduced by J. Hofbauer and H. Sandholm in 2009. We first construct a complete distance space M consisting of stable population games and show that most of stable population games have unique Nash equilibrium point that according to Baire’s category theorem. It implies that every stable population game that possesses more than one Nash equilibrium can be approached arbitrarily by a sequence of the stable population game each of which has a unique Nash equilibrium. Then, we construct a bounded rationality function and deduce some results on the generic well-posedness implying Tikhonov well-posedness and Hadamard well-posedness for stable population games.

Toward a balancing (win-win) and sharing world (Matsui, 2018), there might exist a class of kernels or black-holes at the harmonic cross zone. This article discusses the marginal diversity toward balancing, integration (win-win), and a sharing equilibrium, and obtains the relative or Chameleon’s condition of the correlation coefficient at the lower level, and the information amount at the upper level, on the dualism of artifacts. Instead of Simon’s bounded rationality, the new concept of a pair (diversity, integration) is introduced, and there are the relative pairs with a lower correlation coefficient of 0.8, and upper marginal diversity with a ratio of 0.6 at the knowledgeable or higher society. Finally, this pair map (microcosm) of the body is obtained for the win-win and sharing world and its harmony, and the Chameleon’s existence (marginal diversity) is ascertained and positioned at the hyperboloid of the pair-map (integration, sharing).

We introduce NLK, a model that connects the Nash equilibrium (NE) and Level-K. It allows a player in a game to believe that her opponent may be either less or as sophisticated as, she is, a view supported in psychology. We apply NLK to data from five published papers on static, dynamic, and auction games. NLK provides different predictions than those of the NE and Level-K; moreover, a simple version of NLK explains the experimental data better in many cases, with the same or lower number of parameters. We discuss extensions to games with more than two players and heterogeneous beliefs., Comment: Keywords: Nash equilibrium, Level-K, Bayesian Nash Equilibrium, Sub-game Perfect Bayesian Nash Equilibrium, Bounded rationality, psychology, behavioral economics, false consensus effects, centipede Game, the 11-20 money request game, Common Value Auction, experienced and inexperienced bidders, learning in games, equilibrium solution concepts, strategic thinking, chess players

This paper studies a Cournot duopoly game in which firms produce homogeneous goods and adopt a bounded rationality rule for updating productions. The firms are characterized by an isoelastic demand that is derived from a simple quadratic utility function with linear total costs. The two competing firms in this game seek the optimal quantities of their production by maximizing their relative profits. The model describing the game’s evolution is a two-dimensional nonlinear discrete map and has only one equilibrium point, which is a Nash point. The stability of this point is discussed and it is found that it loses its stability by two different ways, through flip and Neimark–Sacker bifurcations. Because of the asymmetric structure of the map due to different parameters, we show by means of global analysis and numerical simulation that the nonlinear, noninvertible map describing the game’s evolution can give rise to many important coexisting stable attractors (multistability). Analytically, some investigations are performed and prove the existence of areas known in literature with lobes.

The Nash equilibrium is one of the most central solution concepts to study strategic interactions between multiple players and has recently also been shown to capture sensorimotor interactions between players that are haptically coupled. While previous studies in behavioural economics have shown that systematic deviations from Nash equilibria in economic decision-making can be explained by the more general quantal response equilibria, such deviations have not been reported for the sensorimotor domain. Here we investigate haptically coupled dyads across three different sensorimotor games corresponding to the classic symmetric and asymmetric Prisoner's Dilemma, where the quantal response equilibrium predicts characteristic shifts across the three games, although the Nash equilibrium stays the same. We find that subjects exhibit the predicted deviations from the Nash solution. Furthermore, we show that taking into account subjects' priors for the games, we arrive at a more accurate description of bounded rational response equilibria that can be regarded as a quantal response equilibrium with non-uniform prior. Our results suggest that bounded rational response equilibria provide a general tool to explain sensorimotor interactions that include the Nash equilibrium as a special case in the absence of information processing limitations.

Results from a behavioral economic laboratory experiment are used to enhance our understanding of public health decisions made during the COVID-19 pandemic. The identification of systematic biases from optimal decision theory found in controlled experiments could help inform public policy design for future public health crises. The laboratory and the shelter-in-place decisions made during COVID-19 included elements of risk, uncertainty and ambiguity. The lab findings found individuals adopt different decision rules depending on both personal attributes and on the context and environment in which the decision task is conducted. Key observations to consider in the context of the COVID-19 decision environment include the importance of past experience, the ability to understand and calculate the odds of each action, the size and differences in economic payoffs given the choice, the value of information received, and how past statistical independent outcomes influence future decisions. The academic space encompassing both public health and behavioral economics is small, yet important, particularly in the current crisis. The objective of continued research in this area would be to develop a more representative model of decision-making processes, particularly during crisis, that would serve to enhance future public health policy design.

To analyze the effect of customer enterprises’ behavior on freight transport markets with various products, a bi-level programming model for freight pricing is developed. The transport companies make decisions in the upper level, a large number of customer enterprises make decisions at the lower level. Cumulative prospect theory is adopted to depict customers’ bounded rationality. The complex network model is introduced to construct the interactions among customer enterprises where the changes in their risk attitudes are depicted by dynamic evolution of their heterogeneous reference points. The existence of the generalized Nash equilibrium is proved and verified. A comparison of the optimal solutions of the new model and the traditional logit based choice model is conducted. The results show that (1) the new model fully embodies the characteristics of cumulative prospect theory and can also improve customers’ utility; (2) the equilibrium freight price and the total profits of transport companies increase with increases in the customers’ interaction intensity.

Rad se bavi decizionističkim pravcem u izučavanju organizacije i cilj mu je prikazati teoriju američkog nobelovca Herberta Simona kao njezinoga glavnog predstavnika. U radu se analiziraju neposredno Simonovi tekstovi, radovi drugih autora, njegovih bliskih suradnika, ali i kritičara, te domaća literatura koja se bavi odlučivanjem u organizaciji i problemom odlučivanja općenito. Iako je prepoznat njegov izvanredni doprinos disciplini, u domaćoj literaturi iz područja teorije organizacije nedostaje sustavan pregled Simonova rada. Cilj je ovog rada popuniti tu prazninu. U radu se najprije analiziraju temeljni koncepti Simonove teorije odlučivanja: racionalnost odlučivanja i, posebno, ograničenja racionalnosti, potraga za zadovoljavajućim rješenjem, heuristika, razlikovanje između programiranih i neprogramiranih odluka. Zatim se iznosi Simonovo razumijevanje organizacija argumentirajući kako ono počiva na razlikovanju između dvije vrste odluka: odluke o pristupanju u članstvo i drugih odluka koje se donose unutar organizacije. Konačno, zadnji dio rada bavi se kritikom Simonove teorije odlučivanja i teorije organizacije., The paper deals with the decisionist approach to organization theory and presents the work of American Nobel laureate Herbert Simon as its chief representative. Information is collected from the work written by Simon himself, from books and papers authored by other people, most notably his close associates and critics, as well as Croatian literature dealing with decision-making in organizations and decision-making in general. Although his extraordinary contribution to several disciplines is recognized in the domestic literature, there is no systematic overview of Simon’s work. This paper aims to fill this void. First part of the paper tackles the basic concepts of Simon’s decisionmaking theory: rationality of decision-making and, in particular, bounded rationality, search for a satisfying solution (satisficing), heuristics, and differentiation between programmed and non-programmed decisions. The paper proceeds by presenting Simon’s understanding of decision-making within the organizational setting. It is argued that Simon’s understanding of organizations is anchored in the differentiation between two types of decisions: decision to participate and decision to produce (intraorganizational decisions). Finally, the last part of the paper explores criticism of Simon’s work.

In this study, we apply a topologically distributed bounded rationality model to quantify the level of rationality in supply chain networks. We use the averaged Jensen-Shannon divergence values bet...