On the Contributions of Herbert A. Simon to Economics

Abstract

The contributions of Herbert A. Simon are extremely vast and diverse, ranging from philosophy and methodology of science, applied mathematics, through various aspects of economics, computer science, management science, political science, cognitive psychology to the study of human problem-solving behavior. What makes his work truly remarkable is that he not only has had something fundamental and original to say in almost all of these areas, but he developed almost all of his many ideas precisely and far enough to serve as a basis for empirical work, which he himself has undertaken on many occasions. Today, in many of these areas, we can recognize the characteristic stamp of Simon's work imbedded in their basic body of knowledge. Given this vastness and diversity of Simon's contribution, it is obviously impossible to summarize it in a few pages. Throughout his writings, however, there runs a consistent theme: to construct a comprehensive framework for modelling and analyzing the behavior of man and his organizations faced with a complex environment, recognizing the limitation of his ability to comprehend, describe, analyze and to act, while allowing for his ability to learn and to adopt. This limitation of human abilities is crucial not only in determining the behavior of many and his society, but also in formulating the methodology of science becaause the scientist is also a man with limited intellectual capacity.' In this review of Simon's work, I shall attempt to illustrate how the application of this theme to four quite different areas has led Simon to critical contributions in each of these topics. The first is the problem of describing the goals and criteria of the decision maker in some approximate manner which makes it possible to solve the decision problem. The second is a discussion of the relationship between the dynamic adjustment processes in economics and the study of the limits of man's capacity to adapt to complex changes in