Bounded Rationality, Heuristics, Computational Complexity, and Artificial Intelligence

Bettis, RA., & Hu, S. 2018. Bounded Rationality, Heuristics, Computational Complexity, and Artificial Intelligence. Advances in Strategic Management, Behavioral Strategy in Perspective (Augier, M, Fang, C., & Rindova, V.P. ed.), 39: 139 – 150. Emerald Publishing Limited.

Kenan Institute of Private Enterprise Research Paper No. 18-30

21 Pages Posted: 11 Oct 2018

See all articles by Richard A Bettis

Richard A Bettis

University of North Carolina (UNC) at Chapel Hill - Entrepreneurial Program

Songcui Hu

University of Arizona - Department of Management and Organizations

Date Written: September 18, 2018

Abstract

Herbert A. Simon and Alan Newell won the Turing Award jointly in Computer Science for foundational work on Artificial Intelligence. Simon also won the Nobel Prize in Economics for the concept of “bounded rationality.” In both cases, the same heuristic was deemed fundamental: “Search till a satisfactory solution is found.” We argue that behavioral strategy can learn a great deal from the Theory of Computational Complexity and Artificial Intelligence. These fields can provide a sounder theoretical grounding for bounded rationality and for the necessity and usefulness of heuristics. Finally, a concept of “organizational intractability” based roughly on the metaphor provided by the Theory of Computational Complexity may be useful in determining what analytical decision technologies are actually intractable in real organizations with constraints on time and managerial attention.

Keywords: bounded rationality, heuristics, computational complexity, behavioral strategy

Suggested Citation

Bettis, Richard A and Hu, Songcui, Bounded Rationality, Heuristics, Computational Complexity, and Artificial Intelligence (September 18, 2018). Bettis, RA., & Hu, S. 2018. Bounded Rationality, Heuristics, Computational Complexity, and Artificial Intelligence. Advances in Strategic Management, Behavioral Strategy in Perspective (Augier, M, Fang, C., & Rindova, V.P. ed.), 39: 139 – 150. Emerald Publishing Limited. , Kenan Institute of Private Enterprise Research Paper No. 18-30, Available at SSRN: https://ssrn.com/abstract=3251489

Richard A Bettis (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Entrepreneurial Program ( email )

Chapel Hill, NC
United States

Songcui Hu

University of Arizona - Department of Management and Organizations ( email )

405 McClelland Hall
P.O. Box 210108
Tucson, AZ 85721-0108
United States

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