The limits to justification outlined here often go unrecognized. The logic of Efficient Market Theory fails to impress when we consider it from the perspective of the welfare of society rather than the profit of a speculator. Here, we use the term environment to refer to the statistical properties of a set of objects, such as the correlations between attributes of these objects (i.e., cues) and a criterion. Our economics represents the logic of social power and vested interests clothed in the garb of intellectual theory. The chosen solution will be in agreement with the preferences and beliefs of the decision maker. But no matter what we call it, financial speculation and the insider trading on which it thrives is a sub-discipline of gambling, not of an economic science concerned with social productivity and human welfare. Slavery was only abolished constitutionally 90 years after the signing of the Declaration of Independence. Many of the greatest discoveries of modern science are the result of processes which we do not understand. All of them were witness to both the terrible consequences of its application and to the ominous threat it posed to the future of humankind. Although there have been significant breakthroughs, there are still things in this world which leave us baffled. If the human mind is capable of knowledge that combines, integrates, reconciles and transcends the separate and disparate partial knowledge generated by its component functions, then it must be by an action of the whole mind that in some way combines, integrates, reconciles and transcends the workings of all these individual faculties. All rational human beings who remained silent for so long are complicit in the charade and the folly. The underlying source of inflation in expanding societies is the rising self-respect and aspirations of the disenfranchised who no longer consent to work for subsistence level wages. The dispute between rationalism and empiricism takes place withinepistemology, the branch of philosophy devoted to studying the nature,sources and limits of knowledge. Even if we could successfully combine our knowledge of all these components, it would not provide an adequate picture. Economy has become divorced from the society it is intended to serve. Without knowledge of the social dynamics that drive development and the catalytic role of dynamic individuals in that process, any economic theory is stillborn. The decades-old debate between neo-Keynesianism and neo-liberalism neglects the fact that neither presents a comprehensive and coherent view of economy as a subset and integral component of a wider social reality which encompasses political, social, technological, cultural, ecological and psychological factors. The capacity to generate remarkable devices certainly demonstrates the practical power of applied science, but it does not logically prove that its fundamental suppositions are correct. Complexity and chaos are concepts that have helped us transcend the linear fragmented thinking of traditional disciplines, but essentially these are only descriptive rather than explanatory terms. The mass annihilation of human beings by atomic bombs in 1945 later gave rise to the implacable ‘logic’ of mutually assured destruction. The difference is that we now have high sounding terms and principles to explain the process of governance, giving a rational gloss to power politics and social processes. Simon Herbert’s theory of Bounded Rationality has emerged as an essential concept within Behavioural Economics to explain the limitations of human rational decision making. Rational discourse is displaced by social conformity in academia. Rationalization masquerades as rationality in human affairs. If that is the case, then the possibility arises of solving humanity’s pressing problems and also consciously fostering the creation of greater opportunities by a conscious initiative to overcome the limitations in the way we exercise our mental faculties. The study of physically observable objects was taken to be synonymous with the impartial, disinterested pursuit of knowledge and the study of non-material phenomena was relegated to the category of subjective speculation and superstition. He started his own instrument making company at the age of 18 and fashioned his first successful steam engine two decades later. Lasswell fully recognized the complexity of factors that contribute to the creation, application and interpretation of law and the inadequacy of logic as the sole instrument for comprehending these processes. Sorry, preview is currently unavailable. Rationality, for economists, simply means that when you make a choice, you will choose the thing you like best.¹ This is very different from the way we normally think about rationality. 1. That is as true today in the world of science as it was at the time of Copernicus and Galileo. Seven decades ago many brilliant minds were engaged in a feverish race to apply scientific knowledge to enhance the technology for mechanized warfare in the genuine belief that their cause was just and necessary to usher in a peaceful prosperous world for all human beings. A single intangible object without mass or dimensions – the idea of freedom – has stirred the human heart throughout history to surmount overwhelming force and technological superiority. That wisdom applies to the instrumentation of rationality as well. More than 70,000 larger, more deadly nuclear weapons were produced, armed and made ready for launch at a moment’s notice. To economists—as long as you’re doing what you want given your situation, you’re acting rationally. The theory of bounded rationality holds that an individual’s rationality is limited by the information they have, the cognitive limitations of their minds, and the finite amount of time they have to make a decision. Therefore, the science of statistics has devised numerous tests to determine the significance of numerical results. The technological revolution of the 19th and 20th centuries resulted as much from the rapid spread of democracy, universalization of education, expansion of commerce and the growth of media for dissemination of information as from the scientific theories of the times. Bounded rationality is based on three main limitations that result in sub-optimal decision making. This is a call to transcend the limits imposed by mind’s characteristic functioning as a basis for formulating comprehensive solutions to the pressing challenges facing humanity today. There is no such thing as Homo economicus or Homo politicus. Ptolemy’s theory of epicycles was sufficient to predict the motion of planets and eclipses with 99.9% accuracy. More than 70,000 larger, more deadly nuclear weapons were produced, armed and made ready for launch at a moment’s notice. The natural philosophers of the Enlightenment in search for an objective standard of knowledge to counter the received wisdom of church doctrine naturally turned to the study of external Nature, since the physical world was the only field in which reliable measurement by an agreed upon standard was readily possible for impartial disinterested observation. But these most subtle intangible realities are by far the most powerful and lasting. Many great scientists have acknowledged the intuitive processes by which they arrived at fresh insights into reality, yet the process of intuitive discovery itself lies outside the mainstream of modern science. Obviously there are limits to human rationality, in practice if not in theory. This capacity of mind is responsible for many remarkable achievements of modern science. Three inspiring ideals spurred the revolution that transformed France and swept the continent. Bounded rationality is the idea that rationality is limited when individuals make decisions. Mind’s habitual mode of functioning leads to error in the name of rational thinking – among them, its tendency to divide and subdivide reality in an endless fragmentation of knowledge, to confound description with explanation, to view reality in terms of irreconcilable polar opposites, to mistake symbolic abstraction for the reality it represents, and to draw conclusions predetermined by its own premises. That is only possible by an action of the whole mind, which is the basis of the insights and intuitions that are the source of our greatest human initiatives, scientific discoveries and artistic creativity. Neither theory can explain how a single individual named Steve Jobs could found a fledgling enterprise in his garage with $5000 and build it into a Fortune 500 company in less than a decade, while launching a technological and economic revolution that is still unfolding and making Apple Computers the most valuable corporation in the entire world. The general public may be innocently misinformed about the efficacy and infallibility of science, but scientists cannot afford the same luxury. This chapter explores when and why less can be more in decision making, through the study of the ecological rationality of decision mechanisms used in appropriate contexts. At a deeper level we need also to remain ever conscious of the inherent limits to mentality itself. You can download the paper by clicking the button above. 4. Yet rarely does science reflect on the inherent limitations of rationality arising from the fundamental characteristics of mind. Indeed, when we take a disinterested view of the world around us, it is evident that rationality is the exception rather than the norm in human affairs − even among the most informed, educated and idealistic. Sociologists have traditionally tended to overstate the role of norms in explaining human behavior. We seek to explain the pursuit of truth, love, freedom and science itself as the result of hormonal secretions and nervous excitations. If you mean the rationality that concerns human logical thought - the limit is the knowledge accumulated by the person, that possesses that knowledge and logical thinking. Financial markets are social institutions established to serve a social purpose. Since none of these attributes are amenable to rational discourse, we are condemned to irreconcilable and perpetual conflict.