Bounded Rationality

Well what'd you know, it's my three hundredth post. =)

The social exchange theory proposes that individuals act to maximise the gains and minimise the losses in their relationships.

This cost-benefit analysis seem to be mind-blowing obvious and makes logical sense to any rational person. Economics proposes that human beings are all rational people with unlimited needs and wants. But are we really?

Being truly rational would mean an endless search for everything perfect - the best possible option, or relationship, which in reality, could never possibly truly exist. There would come a point in time when one would have to say, " okay, I think you'll do." Being boundedly rational, we "satisfice" and make do with what we have.

But just when do we stop the search for alternatives? When can or should we stop our escalation of commitment - when we already know that we are no longer gaining anything or no longer minimising our losses? With so much sunk costs at stake, we tend to engage in a problemistic search as opposed to a slack search.

Then again, this search would have to come to a halt at the survival point, or psychologists would call it learned helplessness, when we know that there is no longer anything we can do to change the situation due to the lack or absence of control. And then we stop. Or do we?

Theories. Too idealistic to work in the real world.

But that's psychology enmeshed with a little management revision for you. =)

And I'll end today's entry with yet another quote. This one goes out to all the narrow-minded people who think that engineering and science is the only way to go about being successful in life.

“To love what you do and feel that it matters, how could anything be more fun?"

- Katherine Graham, Publisher, The Washington Post.

3.2. Never again.

Incomplete information sometimes causes your imagination to run wild.