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| Author: | Radner, R. |
| Title: | Bounded rationality, indeterminacy, and the theory of the firm. |
| Journal: | Economic Journal
1996 : SEP, VOL. 106:438, p. 1360-1373 |
| Index terms: | GAME THEORY RATIONALITY COMPANIES ORGANIZATIONAL DESIGN DECISION MAKING |
| Language: | eng |
| Abstract: | The conclusion of the author is that costly rationality alone leads to the decentralisation of information processing, decision making, and incentives in firms. He also argues that truly bounded rationality, together with indeterminacy of equilibrium, make the current game- theoretic approach to the theory of the firm both implausible and inadequate. Although the game-theoretic approach has proved to be a useful abstraction, in his opinion it has also missed significant features of the organisation of firms, which can only be explained by a satisfactory theory of truly bounded rationality. |
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