Sometimes an idea sneaks into economics from a completely unexpected angle — almost like a rogue wave hitting a calm beach. That’s exactly what happened when a quiet, mathematically gifted economist looked at markets and thought, “These things move like molecules.” And just like that, a whole new field was born.
Say hello to Herbert Simon, the man who dared to suggest that humans… aren’t perfectly rational. A scandalous idea in mid-20th-century economics, where the reigning assumption was that people always make optimal decisions. Simon watched actual humans — the kind who forget keys, buy snacks they don’t need, and panic at discounts — and thought, “Yeah… that’s not happening.”
Simon introduced the concept of bounded rationality. In one clean stroke, he declared that humans don’t weigh every option or calculate perfect outcomes. Instead, we “satisfice”—we pick something that’s good enough. It’s the economic equivalent of shrugging at dinner plans because the restaurant is close and you’re tired.
His research wasn’t just armchair speculation. Simon studied real decision-making: in organizations, in households, in problem-solving tasks. He blended psychology with economics long before it was cool, building models of how people actually think, not how textbooks wished they did. This work reshaped everything from market theory to AI research, earning him the Nobel Prize in 1978.
What made Simon special wasn’t just his theory but his attitude. He believed human quirks weren’t flaws — they were features. Our limited memory, imperfect logic, and messy motivations form the true blueprint of economic behavior. Markets aren’t machine-like; they’re human-shaped.
Simon changed economics by pointing out what everyone secretly knew: people have lives, emotions, deadlines, and tiny brains constantly juggling too much. Once you accept that, everything from consumer behavior to government policy looks different.
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