Founder of Behavioural Economics

Herbert A. Simon was born on June 15, 1916, in Milwaukee, Wisconsin, USA. He was a pioneering figure in the fields of psychology, economics, and computer science, particularly known for his groundbreaking work in behavioral economics. Simon was one of the first to challenge the traditional notion of humans as perfectly rational decision-makers. His key idea, “bounded rationality,” proposed that individuals make decisions within the limits of their knowledge and cognitive abilities, rather than optimizing their choices in a purely rational manner. This concept became central to behavioral economics and helped shift the focus away from perfect rationality.

Simon earned his undergraduate degree in political science from the University of Chicago in 1936, where he was influenced by the Chicago School of Economics. He later obtained a Master’s degree in economics from the University of Chicago in 1938. His academic career led him to teach at several prestigious institutions, including the Carnegie Institute of Technology (now Carnegie Mellon University), where he worked for much of his career and developed many of his key theories.

Simon’s major works include Administrative Behavior (1947), which applied psychological insights to organizational theory, and Models of Man (1957), where he expanded on bounded rationality and decision-making processes. He also contributed to the development of artificial intelligence, coining the term “satisficing” to describe the process of searching for a solution that is “good enough” rather than optimal. Simon received the Nobel Prize in Economics in 1978 for his work on decision-making and organizational behavior, which had lasting effects on multiple disciplines. Simon passed away on February 9, 2001, in Pittsburgh, Pennsylvania, USA.