Modeling the Interacting Decisionmaker with Bounded Rationality

An analytic characterization of the process of executing a well-defined decisionmaking task by a human decisionmaker is presented. A basic two-stage model of this process is introduced in which external situations are first assessed and then responses are selected. An information theoretic framework is used in which internal activity is described not only in terms of transmission or throughput, but also in terms of coordination, internal decisionmaking, and blockage. A constraint on the total rate of internal processing is suggested as a model of bounded rationality for this case. Optimizing and satisficing strategies are derived and their properties analyzed in terms of performance and workload. Finally, direct and indirect controls are discussed as models of the decisionmaker's interaction with the organization.