Encyclopedia, Difference between revisions of "Herbert A. Simon" - New World

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[[Image:HerbertSimon.jpg|right|Herbert Simon, c. 2000]]
 
[[Image:HerbertSimon.jpg|right|Herbert Simon, c. 2000]]
  
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'''Herbert Alexander Simon''' ([[June 15]], [[1916]] – [[February 9]], [[2001]]) was an [[United States|American]] researcher in the fields of [[cognitive psychology]], [[computer science]], [[public administration]], [[economic sociology]], and [[philosophy]] (sometimes described as a [[polymath]]).  
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'''Herbert Alexander Simon''' (born June 15, 1916 – died February 9, 2001) was an [[United States|American]] researcher in the fields of [[cognitive psychology]], [[computer science]], [[public administration]], [[economic sociology]], and [[philosophy]] (sometimes described as a [[polymath]]). In 1978 he received the [[Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel|Nobel Prize in Economics]] for his pioneering research into the decision-making process within economic organizations. He coined the terms ''[[bounded rationality]]'' and ''[[satisficing]]''.  
  
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He was awarded the [[Association for Computing Machinery|ACM]]'s [[Turing Award|A.M. Turing Award]] along with [[Allen Newell]] in [[1975]] for making "basic contributions to artificial intelligence, the psychology of human [[cognition]], and list processing." In [[1978]] he was awarded the [[Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel|Nobel Memorial Prize in Economics]] "for his pioneering research into the decision-making process within economic organizations". He also received the [[National Medal of Science]] in [[1986]]. He coined the terms ''[[bounded rationality]]'' and ''[[satisficing]]''.
 
 
==Life==
 
==Life==
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Herbert Alexander Simon was born in [[Milwaukee]], [[Wisconsin]] on [[June 15]], [[1916]].  His father was an electrical engineer who had come to the United States from [[Germany]] in [[1903]] after earning his engineering diploma at the Technische Hochschule of [[Darmstadt]].  His father was also an inventor and designer of electrical control gear, and later in life, a patent attorney.  Simon’s mother was an accomplished pianist and a third generation American.  Her family had immigrated from [[Prague]] and [[Köln]].  His European ancestors had been piano builders, goldsmiths, and vintners.
 
  
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Herbert Simon was educated as a child in the public school system in Milwaukee where he developed an interest in science.  He found schoolwork to be interesting but rather easy.  Unlike many children, Simon was exposed to the idea that human behavior could be studied scientifically at a relatively young age due to the influence of his mother’s younger brother, Harold Merkel, who had studied economics at the [[University of Wisconsin]] under John R. Commons.  Through his uncle’s books on economics and psychology, Simon discovered the social sciences.
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Herbert Alexander Simon was born in [[Milwaukee]], [[Wisconsin]] on June 15, 1916.  His father, Arthur Carl Simon, was an electrical engineer who had come to the United States from [[Germany]] in 1903 after earning his engineering diploma at the Technische Hochschule of Darmstadt. Arthur was also an inventor and designer of electrical control gear, and later in life, a patent attorney. Simon’s mother, Edna Merkel Simon, was an accomplished pianist and a third generation American. Her family had emigrated from [[Prague]] and [[Köln]], where her European ancestors had been piano builders, goldsmiths, and vintners.  
  
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Among his earliest influences, Simon has cited [[Richard Ely]]’s economics textbook, [[Norman Angell]]’s ''[[The Great Illusion]]'', and [[Henry George]]’s ''[[Progress and Poverty]]''.  In [[1933]], Simon entered the [[University of Chicago]], and following those early influences, he studied the social sciences and mathematics.  His most important mentor at the University was [[Henry Schultz]] who was an econometrician and mathematical economist. Eventually his studies led him to the field of organizational decision making which would become the subject of his doctoral dissertation.
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As a child, Herbert Simon was educated in the public school system in Milwaukee, where he developed his interest for science. He found schoolwork interesting, but rather easy.  Unlike many children, Simon was exposed to the idea that human behavior could be studied scientifically at a relatively young age, due to the influence of his mother’s younger brother, Harold Merkel, who had studied economics at the [[University of Wisconsin]] under John R. Commons. Through his uncle’s books on economics and psychology, Simon discovered the social sciences.
  
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From [[1939]] to [[1942]], Simon acted as director of a research group at the [[University of California, Berkeley]].  When the group’s grant was exhausted, he took a position in political science at the [[Illinois Institute of Technology]].  Back in [[Chicago]], he began participating in the seminars held by the staff of the Cowles Commission who at that time included [[Jacob Marschak]] and [[Tjalling Koopmans]].  He thus began a more in-depth study of economics in the area of [[institutionalism]].  Marschak brought Simon in to assist in the study he was currently undertaking with [[Sam Schurr]] of the “prospective economic effects of atomic energy”.
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Among his earliest influences, Simon has cited [[Richard Ely]]’s economics textbook, [[Norman Angell]]’s ''The Great Illusion'', and [[Henry George]]’s ''Progress and Poverty''.  In 1933, Simon entered the [[University of Chicago]], and following those early influences, studied the social sciences and mathematics. His most important mentor at the University was [[Henry Schultz]] who was an econometrician and mathematical economist. Simon graduated from the University of Chicago in 1936. Eventually, his studies led him to the field of organizational decision-making, which would become the subject of his doctoral dissertation. During the last year of his graduate study he met Dorothea Isabel Pye, whom he married on December 25, 1937. Their first daughter Kathie was born in 1942, followed two years later by Peter, and two years after that by Barbara.
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From 1939 to 1942, Simon acted as director of a research group at the [[University of California, Berkeley]].  When the group’s grant was exhausted, he took a position in political science at the [[Illinois Institute of Technology]].  Back in [[Chicago]], he began participating in the seminars held by the staff of the Cowles Commission, who at that time included [[Jacob Marschak]] and [[Tjalling Koopmans]].  Simon began a more in-depth study of economics in the area of [[institutionalism]].  Marschak brought Simon in to assist in the study he was then conducting with [[Sam Schurr]] of the “prospective economic effects of atomic energy”. Simon received his Ph.D. in 1943.
 
 
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From [[1950]] to [[1955]], Simon studied mathematical economics and during this time, together with [[David Hawkins]], discovered and proved the Hawkins-Simon theorem on the “conditions for the existence of positive solution vectors for input-output matrices." He also developed theorems on near-decomposability and aggregation. Having begun to apply these theorems to organizations, Simon determined around [[1954]] that the best way to study problem-solving was to simulate it with computer programs, which led to his interest in computer simulation of human cognition.
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In 1949 he became the Richard King Mellon University Professor of Computer Science and Psychology, and a member also of the Departments of Philosophy and of Social and Decision Sciences. In the same year, when Carnegie Institute of Technology decided to open a Graduate School of Industrial Administration in Pittsburg, Simon decided to move too.
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From 1950 to 1955, Simon studied mathematical economics and during that time, together with [[David Hawkins]], discovered and proved the Hawkins-Simon theorem on the “conditions for the existence of positive solution vectors for input-output matrices." He also developed theorems on near-decomposability and aggregation. Having begun to apply these theorems to organizations, Simon determined (around 1954) that the best way to study problem-solving was to simulate it with computer programs, which led to his interest in computer simulation of human cognition.
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While living in [[Pittsburgh, PA]], he advised the citizenry on various issues including the use of public funds to build stadiums and the method of raising tax revenue. Simon emphasized the usefulness of the [[land tax]], reflecting the early influence of [[Henry George]] on his economic thought.
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During 1960s and 1970s Simon published numerous works in the area of economic thought and decision-making. In 1969 he received the Distinguished Scientific Contribution Award of the [[American Psychological Association]], for his work in cognitive psychology. In 1975 Simon was awarded the A.M. Turing Award of the Association for Computing Machinery (with Allen Newell). In 1978 he reached the peak of his brilliant career, receiving the Alfred Nobel Memorial Prize in Economic Sciences.  In 1986 he received the National Medal of Science, in 1988, the John von Neumann Theory Prize of ORSA/TIMS, and in 1995, the Research Excellence Award of the International Joint Conference on Artificial Intelligence. He wrote numerous books and papers.
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Simon remained professor on Carnegie Mellon University until his death in 2001.
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==Work==
  
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== Contributions ==
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Herbert Simon was a true [[polymath]]. He was interested in cognitive psychology, computer science, mathematics, public administration, economy, statistics, philosophy, and many other fields. He remained most famous, however, for his contributions in the areas of human cognition, artificial intelligence, and economic thought.
  
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Simon was a pioneer in the field of [[artificial intelligence]], creating with [[Allen Newell]] the [[Logic Theory Machine]] ([[1956]]) and the [[General Problem Solver]] (GPS) ([[1957]]) programs. GPS was possibly the first method of separating problem solving strategy from information about particular problems. Both programs were developed using the [[Information Processing Language]] (IPL) ([[1956]]) developed by Newell, [[Cliff Shaw]] and Simon. [[Donald Knuth]] mentions (in Volume 1 of ''[[The Art of Computer Programming]]'') the development of list processing in IPL with the [[linked list]] originally called "NSS memory" for its inventors.
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===Psychology===
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''Administrative Behavior'' was Herbert Simon’s doctoral dissertation and his first book. It served as the foundation for his life's work. The book addresses a wide range of human behaviors, cognitive abilities, management techniques, personnel policies, training goals and procedures, specialized roles, criteria for evaluation of accuracy and efficiency, and all of the ramifications of communication processes. The centerpiece of the book, however, is the behavioral and cognitive processes of making rational human choices - decisions.  
  
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Simon also collaborated with [[James G. March]] on several works in [[organization theory]].
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Any decision involves a choice, selected from a number of alternatives, directed toward organizational goals or sub-goals. Realistic options will include personnel actions or non-actions, modified by environmental facts and values, and will have real consequences. Sometimes, however, the alternatives may be influenced by our conscious or unconscious decisions, some of the consequences may be unintended, and some of the means and ends may be imperfectly differentiated, incompletely related, or poorly detailed. The task of rational decision making is to select the alternative that results in the more preferred set of all the possible consequences. This task can be divided into three required steps:  (1) the identification and listing of all the alternatives; (2) the determination of all the consequences resulting from each of the alternatives; and (3) the comparison of the accuracy and efficiency of each of these sets of consequences. Any individual or organization attempting to implement this model in a real situation would be unable to comply with the three requirements, because it is highly improbable that one could know all the alternatives, or all the consequences that follow each alternative. Thus, human beings, restricted within the limits of their knowledge, have developed some working procedures that partially overcome these difficulties. These procedures consist of isolating from the rest of the world a limited number of variables and based on them calculating all possible consequences. Based on that, we make decisions.
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Authority is a well studied, primary mark of organizational behavior, and is straightforwardly defined in the organizational context as the ability and right of an individual of higher rank to determine the decision of an individual of lower rank. The actions, attitudes, and relationships of the dominant and subordinate individuals constitute components of role behavior that can vary widely in form, style, and content, but do not vary in the expectation of obedience by the one of superior status, and willingness to obey from the subordinate. Authority is highly influential on the formal structure of the organization, including patterns of communication, sanctions, and rewards, as well as on the establishment of goals, objectives, and values of the organization.  
  
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With [[Allen Newell]], Simon developed a [[theory]] for the [[simulation]] of human [[problem solving]] behavior using production rules (Allen Newell and Herbert A. Simon, Human Problem Solving, [[1972]]).  The study of human [[problem solving]] required new kinds of human measurements and Simon, Newell, and colleagues helped to develop the experimental technique of verbal protocol analysis (K. A. Ericsson and H. A. Simon, Protocol Analysis: Verbal Reports as Data, [[1993]]). Simon was interested in the role of knowledge in expertise. He said that to become an expert required about 10 years of experience and he and colleagues estimated that expertise was the result of learning roughly 50,000 [[chunking (psychology)|chunks]] of information. A [[chess]] [[expert]] was said to have learned about 50,000 chunks or chess position patterns. (Chase and Simon. Perception in Chess. [[Cognitive Psychology]] Volume 4, [[1973]].)
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Decisions can be complex admixtures of facts and values. Information about facts, especially empirically proven facts or facts derived from specialized experience, is more easily transmitted in the exercise of authority than are the expressions of values.  Simon is primarily interested in seeking identification of the individual employee with the organizational goals and values. A person may identify himself with any number of social, geographic, economic, racial, religious, familial, educational, gender, political, and sports groups. Indeed, the number and variety are unlimited. The fundamental problem for organizations is to recognize that personal and group identifications can either facilitate or obstruct correct decision making for the organization. A specific organization has to deliberately determine and specify in appropriate detail and clear language its own goals, objectives, means, ends, and values. Organizational inducements, rewards, and sanctions are all designed to form, strengthen, and maintain this identification.
  
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He was awarded the [[Association for Computing Machinery|ACM]]'s [[Turing Award|A.M. Turing Award]] along with [[Allen Newell]] in [[1975]]. "In joint scientific efforts extending over twenty years, initially in collaboration with [[Cliff Shaw|J. C. (Cliff) Shaw]] at the [[RAND|RAND Corporation]], and subsequentially with numerous faculty and student colleagues at [[Carnegie Mellon University]], they have made basic contributions to [[artificial intelligence]], the psychology of [[human cognition]], and list processing."
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The correctness of decisions is measured by two major criteria: (1) adequacy of achieving the desired objective; and (2) the efficiency with which the result was obtained. Many members of the organization may focus on adequacy, but the overall administrative management must pay particular attention to the efficiency with which the desired result was obtained.
  
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While living in [[Pittsburgh, PA]], he advised the citizenry on various issues including the use of public funds to build stadiums and the method of raising tax revenue. Simon emphasized the usefulness of the [[land tax]], reflecting the early influence of [[Henry George]] on his economic thought.
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===Artificial Intelligence===
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Simon was a pioneer in the field of [[artificial intelligence]]. Together with Allen Newell he created the [[Logic Theory Machine]] (1956) and the [[General Problem Solver]] (GPS) (1957) programs. GPS was possibly the first method of separating problem solving strategy from information about particular problems. Both programs were developed using the [[Information Processing Language]] (IPL), developed by Newell, Cliff Shaw and Simon. Simon also collaborated later with [[James G. March]] on several works in [[organization theory]].
  
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==Contributions to Economic Thought==
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With [[Allen Newell]], Simon developed a theoretical construct for the [[simulation]] of human problem-solving behavior, using production rules. The study of human problem solving required new kinds of human measurement, so Simon, Newell, and colleagues helped to develop the experimental technique of verbal protocol analysis. Simon was interested in the role of knowledge in expertise. He said that to become an expert required about 10 years of experience and he and colleagues estimated that expertise was the result of learning roughly 50,000 [[chunking (psychology)|chunks]] of information. A [[chess]] [[expert]] was said to have learned about 50,000 chunks or chess position patterns. For his 20 years of work Simon was awarded the [[Association for Computing Machinery|ACM]]'s [[Turing Award|A.M. Turing Award]], along with [[Allen Newell]], in 1975. 
  
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Herbert Simon has been credited for revolutionary changes in microeconomics.  He is responsible for the concept of organizational decision-making as it is known today. He was also the first to discuss this concept in terms of uncertainty; i.e. it is impossible to have perfect and complete information at any given time to make a decision. While this notion was not entirely new, Simon is best known for its origination. It was in this area that he was awarded the Nobel Prize in 1978.  
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===Economics===
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Herbert Simon has been credited for revolutionary changes in microeconomics.  He is responsible for the concept of organizational decision-making as it is known today. He was also the first to discuss this concept in terms of uncertainty; i.e. it is impossible to have perfect and complete information at any given time to make a decision. While this notion was not entirely new, Simon is best known for its origination. It was in this area that he was awarded the Nobel Prize in 1978.  
  
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At the [[Cowles Commission]], Simon’s main goal was to link economic theory to mathematics and statistics. His main contributions were to the fields of general equilibrium and econometrics. He was greatly influenced by the marginalist debate that began in the 1930s. The popular work of the time argued that it was not empirically apparent that entrepreneurs needed to follow the marginalist principles of profit-maximization/cost-minimization in running organizations. The argument went on to note that profit-maximization was not accomplished, in part, because of the lack of complete information. In decision-making, Simon believed that agents face uncertainty about the future and costs in acquiring information in the present. These factors limit the extent to which agents can make a fully rational decision, thus they possess only “bounded rationality” and must make decisions by “satisficing,” or choosing that which might not be optimal but which will make them happy enough.
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At the [[Cowles Commission]], Simon’s main goal was to link economic theory to mathematics and statistics. His main contributions were to the fields of general equilibrium and econometrics. He was greatly influenced by the marginalist debate that began in the 1930s. The popular work of the time argued that it was not empirically apparent that entrepreneurs needed to follow the marginalist principles of profit-maximization/cost-minimization in running organizations. The argument went on to note that profit-maximization was not accomplished, in part, because of the lack of complete information. In decision-making, Simon believed that agents face uncertainty about the future and costs in acquiring information in the present. These factors limit the extent to which agents can make a fully rational decision, thus they possess only “bounded rationality” and must make decisions by “satisficing,” or choosing that which might not be optimal but which will make them happy enough.
 
 
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Simon was known for his research on industrial organization.  He determined that the internal organization of firms and the external business decisions thereof did not conform to the Neoclassical theories of “rational” decision-making.  Simon wrote myriad articles on the topic over the course of his life mainly focusing on the issue of decision-making within the behavior of what he termed “bounded rationality.”  “Rational behavior, in economics, means that individuals maximize some target function under the constraints they face (e.g., their utility function) in pursuit of their self-interest. This is reflected in the theory of (subjective) expected utility.   The term bounded rationality is used to designate rational choice that takes into account the cognitive limitations of both knowledge and cognitive capacity. Bounded rationality is a central theme in behavioral economics. It is concerned with the ways in which the actual decision-making process influences decisions. Theories of bounded rationality relax one or more assumptions of standard expected utility theory”.  
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Simon was known for his research on industrial organization.  He argued that the internal organization of firms and the external business decisions thereof did not conform to the Neo-classical theories of “rational” decision-making.  Simon wrote myriad articles on the topic over the course of his life mainly focusing on the issue of decision-making within the behavior of what he termed “bounded rationality.”  “Rational behavior, in economics, means that individuals maximize some target function under the constraints they face (e.g., their utility function) in pursuit of their self-interest. This is reflected in the theory of (subjective) expected utility. The term bounded rationality is used to designate rational choice that takes into account the cognitive limitations of both knowledge and cognitive capacity. Bounded rationality is a central theme in behavioral economics. It is concerned with the ways in which the actual decision-making process influences decisions. Theories of bounded rationality relax one or more assumptions of standard expected utility theory”.  
  
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Simon determined that the best way to study these areas was through computer simulation modeling.  As such, he developed an interest in computer science.  Herbert Simon's main interests in computer science were in artificial intelligence, human-computer interaction, principles of the organization of humans and machines is information processing systems, the use of computers to study (by modeling) philosophical problems of the nature of intelligence and of epistemology, and the social implications of computer technology.  Some of Simon's economic research was directed toward understanding technological change in general and the information processing revolution in particular.
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Simon claimed that the best way to study these areas was through computer simulation modeling.  As such, he developed an interest in computer science.  Herbert Simon's main interests in computer science were in artificial intelligence, human-computer interaction, principles of the organization of humans and machines is information processing systems, the use of computers to study (by modeling) philosophical problems of the nature of intelligence and of epistemology, and the social implications of computer technology.  Some of Simon's economic research was directed toward understanding technological change in general and the information processing revolution in particular.
  
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==Decisions==
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==Legacy==
  
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''Administrative Behavior''<sup>1</sup>was Herbert Simon’s doctoral dissertation and his first book. It served as the foundation for his life's work. The centerpiece of this book is the behavioral and cognitive processes of making rational human choices, that is, decisions. An operational administrative decision should be correct and efficient, and it must be practical to implement with a set of coordinated means.
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Simon’s theories in microeconomics are widely used today. His proposal of the firm as "satisficing", rather than "maximizing" agent, is the base of the industrial organization today, and is an integral part of the so-called "New Institutionalist Economics".
  
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Any decision involves a choice selected from a number of alternatives, directed toward an organizational goal or subgoal. Realistic options will have real consequences consisting of personnel actions or non-actions modified by environmental facts and values. In actual practice, some of the alternatives may be conscious or unconscious; some of the consequences may be unintended as well as intended; and some of the means and ends may be imperfectly differentiated, incompletely related, or poorly detailed.
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With his pioneering work on computer simulation models that can solve problems, Simon can be regarded as one of the founders of the field of artificial intelligence. He influenced numerous researchers to continue in his steps.
  
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The task of rational decision making is to select the alternative that results in the more preferred set of all the possible consequences. This task can be divided into three required steps:  (1) the identification and listing of all the alternatives; (2) the determination of all the consequences resulting from each of the alternatives; and (3) the comparison of the accuracy and efficiency of each of these sets of consequences.<sup>2</sup>  Any given individual or organization attempting to implement this model in a real situation would be unable to comply with the three requirements.  It is highly improbable that one could know all the alternatives, or all the consequences that follow each alternative.
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Simon's contributions to research in the area of decision-making have become increasingly mainstream in the business community thanks to the growth of management consulting. Furthermore, with his work on decision-making he made significant contributins to the field of cognitive psychology.
  
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The question here is: given the inevitable limits on rational decision making, what other techniques or behavioral processes can a person or organization bring to bear to achieve approximately the best result?  Simon writes:“The human being striving for rationality and restricted within the limits of his knowledge has developed some working procedures that partially overcome these difficulties. These procedures consist in assuming that he can isolate from the rest of the world a closed system containing a limited number of variables and a limited range of consequences.”<sup>3</sup>
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==Bibliography==
  
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Administrative Behavior, as a text, addresses a wide range of human behaviors, cognitive abilities, management techniques, personnel policies, training goals and procedures, specialized roles, criteria for evaluation of accuracy and efficiency, and all of the ramifications of communication processes. Simon is particularly interested in how these factors directly and indirectly influence the making of decisions.
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* Simon, Herbert A. 1957. Models of Man. Wiley & Sons.  
  
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Weaving in and out of the practical functioning of all of these organizational factors are two universal elements of human social behavior that Simon addresses in Chapter VII—The Role of Authority<sup>4</sup>, and in Chapter X—Loyalities, and Organizational Identification.<sup>5</sup>
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* Simon, Herbert A. 1976 (original work from 1947). Administrative Behavior: A Study of Decision-Making Processes in Administrative Organizations, (3rd Ed). The Free Press. ISBN 0029289718
  
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Authority is a well studied, primary mark of organizational behavior, and is straightforwardly defined in the organizational context as the ability and right of an individual of higher rank to determine the decision of an individual of lower rank. The actions, attitudes, and relationships of the dominant and subordinate individuals constitute components of role behavior that can vary widely in form, style, and content, but do not vary in the expectation of obedience by the one of superior status, and willingness to obey from the subordinate. Authority is highly influential on the formal structure of the organization, including patterns of communication, sanctions, and rewards, as well as on the establishment of goals, objectives, and values of the organization.  
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* Simon, Herbert A. 1977. Models of Discovery (Boston Studies in the Philosophy of Science). Springer. ISBN 9027708126
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* Simon, Herbert A. 1980. Models of Thought, (Vol. 1 and 2). Yale University Press. ISBN 0300024320
  
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Decisions can be complex admixtures of facts and values. Information about facts, especially empirically proven facts or facts derived from specialized experience, are more easily transmitted in the exercise of authority than are the expressions of values. Simon is primarily interested in seeking identification of the individual employee with the organizational goals and values. Following Lasswell<sup>6</sup> he states that “a person identifies himself with a group when, in making a decision, he evaluates the several alternatives of choice in terms of their consequences for the specified group”<sup>7</sup>. A person may identify himself with any number of social, geographic, economic, racial, religious, familial, educational, gender, political, and sports groups. Indeed, the number and variety are unlimited. The fundamental problem for organizations is to recognize that personal and group identifications can either facilitate or obstruct correct decision making for the organization. A specific organization has to deliberately determine and specify in appropriate detail and clear language its own goals, objectives, means, ends, and values.
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* Simon, Herbert A. 1982. Models of Bounded Rationality, (Vol. 1 and 2). MIT Press. ISBN 0262690861
  
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Chester Barnard pointed out that “the decisions that an individual makes as a member of an organization are quite distinct from his personal decisions”<sup>8</sup>. Personal choices may determine whether an individual joins a particular organization, and continue to be made in his or her extra–organizational private life. But, as a member of an organization, that individual makes decisions not in relationship to personal needs and results, but in an impersonal sense as part of the organizational intent, purpose, and effect. Organizational inducements, rewards, and sanctions are all designed to form, strengthen, and maintain this identification.
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* Simon, Herbert A. 1983. Reason in Human Affairs. Stanford University Press. ISBN 0804711798
  
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The correctness of decisions is measured by two major criteria:  (1) adequacy of achieving the desired objective; and (2) the efficiency with which the result was obtained. Many members of the organization may focus on adequacy, but the overall administrative management must pay particular attention to the efficiency with which the desired result was obtained.
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* Simon, Herbert A. 1991. Models of My Life. BasicBooks, Sloan Foundation Series. ISBN 0465046401
  
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Simon's contributions to research in the area of decision-making have become increasingly mainstream in the business community thanks to the growth of management consulting. Simon's decision-making steps of Intelligence, Design, Choice, and Review are the basis of the work of [[Inferential Focus]].
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* Simon, Herbert A. 1991. Organizations and markets. Journal of Economic Perspectives, 5(2), 28.
  
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===Notes===
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* Simon, Herbert A. 1996. The Sciences of the Artificial, (3rd Edition). MIT Press. ISBN 0262691914
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*1.Simon, Herbert,''Administrative Behavior'', The Free Press, New York. 1976, 3rd. ed. 364pp
 
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*2.Simon, op.cit.p 67
 
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*3.Simon, op.cit.p.82
 
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*4.Simon, op.cit.p.123-153
 
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*5.Simon, op.cit.p.198-216
 
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*6.Lasswell, H.D., ''World Politics and Personal Insecurity'' New York: Whittlesey House,1935 pp.29-51,cited by Simon, in op.cit.p.205
 
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*7.Simon,in op.cit.p205
 
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*8.Barnard, C.I, ''The Functions of the Executive''  Cambridge: Harvard University Press,1938 p77, cited by Simon in op.cit. p202-203
 
  
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==Interesting quotes==
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* Simon, Herbert A. 1997. Models of Bounded Rationality, (Volume 3). MIT Press. ISBN 0262193728
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* Most producers are employees, not owners of the firms..... Viewed from the vantage point of classical [economic] theory, they have no reason to maximize the profits of the firms, except to the extent that they can be controlled by owners.... Moreover, there is no difference, in this respect, among profit-making firms, non-profit organizations, and bureaucratic organizations. All have exactly the same problem of inducing their employees to work toward the organizational goals. There is no reason, a priori, why it should be easier (or harder) to produce this motivation in organizations aimed at maximizing profits than in organizations with different goals. The conclusion that organization motivated by profits will be more efficient than other organizations does not follow the organizational economy from the neo-classical assumptions. If it is empirically true, other axioms will have to be introduced to account for it.
 
  
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* "What information consumes is rather obvious: it consumes the attention of its recipients. '''Hence a wealth of information creates a poverty of attention''', and a need to allocate that attention efficiently among the overabundance of information sources that might consume it." (''Computers, Communications and the Public Interest'', pages 40-41, Martin Greenberger, ed., The Johns Hopkins Press, 1971.)
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* Simon, Herbert A. 1998. An Empirically-Based Microeconomics, Cambridge University Press. ISBN 0521624126 
  
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==Selected bibliography==
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* Simon, Herbert A.; Langley, Pat; Bradshaw, Gary & Zytkow, Jan. 1987. Scientific Discovery: Computational explorations of the creative processes. MIT Press. ISBN 0262620529
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* ([[1947]]) ''[[Administrative Behavior|Administrative Behavior: A Study of Decision-Making Processes in Administrative Organizations]]'' 4th Ed. The Free Press (1997) ISBN 0-684-83582-7. Human Problem Solving, jointly with [[Allen Newell]];
 
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* ([[1957]]) ''[[Models of Man]]'', John Wiley.  Presents mathematical models of human behaviour.
 
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* ([[1958]]) ''[[Organizations]]'' by James G. March and Herbert Simon with the collaboration of Harold Guetzkow.  New York: Wiley.
 
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* ([[1977]]) ''[[Models of Discovery]] : and other topics in the methods of science'', Dordrecht, Holland; Boston: D. Reidel Pub. Co.
 
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* ([[1977]]) ''[[Decomposability|Decomposability: queueing and computer system applications]]'', by [[P. J. Courtois]], (1977, New York: Academic Press)  Courtois was influenced by Simon and Ando's work on hierarchical nearly-decomposable systems in economic modelling to apply it as a criterion for computer systems design, and in this book he presents the mathematical theory of these systems in more detail than in Simon and Ando's original work.
 
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* ([[1979]]) ''[[Models of Thought]]'', Volumes 1 and 2, Yale University Press.  His collected papers on human information-processing and problem-solving.
 
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* ([[1982]]) ''[[Models of Bounded Rationality]]'', Volumes 1 and 2, MIT Press. His collected papers on economics.
 
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* ([[1983]]) ''[[Reason in Human Affairs]]'', Stanford University Press, 1983.  Highly readable little (115 pages) book on human decision-making and information processing based on lectures Simon delivered at Stanford in 1982.  A popular presentation of his technical work.
 
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* ([[1991]]) ''[[Models of My Life]]'' BasicBooks, Sloan Foundation Series. His autobiography.
 
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* ([[1996]]) ''[[The Sciences of the Artificial]]'' (3rd Edition) MIT Press.
 
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* ([[1987]]) ''Scientific Discovery: computational explorations of the creative processes'', with [[Pat Langley]], [[Gary Bradshaw]], and [[Jan Zytkow]], MIT Press.
 
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* ([[1997]]) ''[[An Empirically Based Microeconomics]]'', Cambridge University Press, 1997.  A compact and readable summing-up of his criticisms of conventional "axiomatic" microeconomics, based on a lecture series.
 
−
*([[1997]]) ''Models of Bounded Rationality'', Volume 3, MIT Press. His continued collected papers on economics since the publication of Volumes 1 and 2 in 1982.  The papers grouped under the category "The Structure of Complex Systems" — dealing with issues such as causal ordering, decomposability, aggregation of variables, model abstraction — are of general interest in systems modelling, not just in economics.
 
  
 
==Reference==
 
==Reference==
−
H. Simon, "Organizations and markets," Journal of Economic Perspectives, vol. 5, no. 2 (1991), p. 28.
+
 
 +
* Augier, Mie & March, James G. 2004. Models of a Man: Essays in Memory of Herbert A. Simon. The MIT Press. ISBN 0262012081
 +
 
 +
* Courtois, Pierre J. 1977. Decomposability: Queuing and computer system applications. New York: Academic Press.  ISBN 012193750X
 +
 
 +
* March, James G. 1958. Organizations. New York: Wiley & Sons. ISBN 0471567930
  
 
==External links==
 
==External links==
−
*[http://www.cs.cmu.edu/simon/ A Tribute to Herbert A. Simon]
 
−
*[http://web.archive.org/web/20041130094600/http://www.psy.cmu.edu/psy/faculty/hsimon/hsimon.html Herbert Simon's departmental web pages at Carnegie Mellon University as they were at the time of his death in 2001]
 
−
*[http://diva.library.cmu.edu/Simon/ Full-text digital archive of Herbert Simon]
 
−
*[http://werdet.atspace.com/bin/simonntation-speech.html pioneering research into the decision-making process within economic organizations]
 
  
 +
* [http://www.cs.cmu.edu/simon/ A Tribute to Herbert A. Simon] – Great resource of information on Simon from Carnegie Mellon University website
 +
 +
* [http://web.archive.org/web/20041130094600/http://www.psy.cmu.edu/psy/faculty/hsimon/hsimon.html Herbert Simon's departmental web pages] - Simon’s web pages from Carnegie Mellon University, as they were at the time of his death in 2001
 +
 +
* [http://diva.library.cmu.edu/Simon/ Digital archive of Herbert Simon] - Full-text archive of Simon’s work on Carnegie Mellon University
 +
 +
* [http://werdet.atspace.com/bin/simonntation-speech.html Presentation Speech by Professor Sune Carlson of the Royal Academy of Sciences] – Speech after which Simon received his Nobel Prize in 1978
 +
 +
* [http://nobelprize.org/nobel_prizes/economics/laureates/1978/ Herbert Simon, the Nobel Prize winner] – Nobel Prize website lists Simon as a recipient of this prize in 1978
 +
 +
* [http://www.post-gazette.com/regionstate/20001016simon2.asp CMU's Simon reflects on how computers will continue to shape the world] – Interview with Simon in Post-Gazette from October, 2000
 +
 +
* [http://www.stanford.edu/group/SHR/4-1/text/toc.html Bridging the Gap
 +
Where Cognitive Science Meets Literary Criticism] – Simon’s article “Literary Criticism: A Cognitive Approach” from Stanford Humanities Review, 1995, with peer reviews and critique
  
 +
* [http://www.h-net.msu.edu/~pubadmin/hsimon.html Dr. Herbert Simon’s Gaus Lecture] – Video of Simon’s lecture from 2000
  
 
{{Credit1|Herbert_Simon|74216284|}}
 
{{Credit1|Herbert_Simon|74216284|}}

Revision as of 01:58, 19 September 2006


Herbert Simon, c. 2000

Herbert Alexander Simon (born June 15, 1916 – died February 9, 2001) was an American researcher in the fields of cognitive psychology, computer science, public administration, economic sociology, and philosophy (sometimes described as a polymath). In 1978 he received the Nobel Prize in Economics for his pioneering research into the decision-making process within economic organizations. He coined the terms bounded rationality and satisficing.

Life

Herbert Alexander Simon was born in Milwaukee, Wisconsin on June 15, 1916. His father, Arthur Carl Simon, was an electrical engineer who had come to the United States from Germany in 1903 after earning his engineering diploma at the Technische Hochschule of Darmstadt. Arthur was also an inventor and designer of electrical control gear, and later in life, a patent attorney. Simon’s mother, Edna Merkel Simon, was an accomplished pianist and a third generation American. Her family had emigrated from Prague and Köln, where her European ancestors had been piano builders, goldsmiths, and vintners.

As a child, Herbert Simon was educated in the public school system in Milwaukee, where he developed his interest for science. He found schoolwork interesting, but rather easy. Unlike many children, Simon was exposed to the idea that human behavior could be studied scientifically at a relatively young age, due to the influence of his mother’s younger brother, Harold Merkel, who had studied economics at the University of Wisconsin under John R. Commons. Through his uncle’s books on economics and psychology, Simon discovered the social sciences.

Among his earliest influences, Simon has cited Richard Ely’s economics textbook, Norman Angell’s The Great Illusion, and Henry George’s Progress and Poverty. In 1933, Simon entered the University of Chicago, and following those early influences, studied the social sciences and mathematics. His most important mentor at the University was Henry Schultz who was an econometrician and mathematical economist. Simon graduated from the University of Chicago in 1936. Eventually, his studies led him to the field of organizational decision-making, which would become the subject of his doctoral dissertation. During the last year of his graduate study he met Dorothea Isabel Pye, whom he married on December 25, 1937. Their first daughter Kathie was born in 1942, followed two years later by Peter, and two years after that by Barbara.

From 1939 to 1942, Simon acted as director of a research group at the University of California, Berkeley. When the group’s grant was exhausted, he took a position in political science at the Illinois Institute of Technology. Back in Chicago, he began participating in the seminars held by the staff of the Cowles Commission, who at that time included Jacob Marschak and Tjalling Koopmans. Simon began a more in-depth study of economics in the area of institutionalism. Marschak brought Simon in to assist in the study he was then conducting with Sam Schurr of the “prospective economic effects of atomic energy”. Simon received his Ph.D. in 1943.

In 1949 he became the Richard King Mellon University Professor of Computer Science and Psychology, and a member also of the Departments of Philosophy and of Social and Decision Sciences. In the same year, when Carnegie Institute of Technology decided to open a Graduate School of Industrial Administration in Pittsburg, Simon decided to move too.

From 1950 to 1955, Simon studied mathematical economics and during that time, together with David Hawkins, discovered and proved the Hawkins-Simon theorem on the “conditions for the existence of positive solution vectors for input-output matrices." He also developed theorems on near-decomposability and aggregation. Having begun to apply these theorems to organizations, Simon determined (around 1954) that the best way to study problem-solving was to simulate it with computer programs, which led to his interest in computer simulation of human cognition.

While living in Pittsburgh, PA, he advised the citizenry on various issues including the use of public funds to build stadiums and the method of raising tax revenue. Simon emphasized the usefulness of the land tax, reflecting the early influence of Henry George on his economic thought.

During 1960s and 1970s Simon published numerous works in the area of economic thought and decision-making. In 1969 he received the Distinguished Scientific Contribution Award of the American Psychological Association, for his work in cognitive psychology. In 1975 Simon was awarded the A.M. Turing Award of the Association for Computing Machinery (with Allen Newell). In 1978 he reached the peak of his brilliant career, receiving the Alfred Nobel Memorial Prize in Economic Sciences. In 1986 he received the National Medal of Science, in 1988, the John von Neumann Theory Prize of ORSA/TIMS, and in 1995, the Research Excellence Award of the International Joint Conference on Artificial Intelligence. He wrote numerous books and papers.

Simon remained professor on Carnegie Mellon University until his death in 2001.

Work

Herbert Simon was a true polymath. He was interested in cognitive psychology, computer science, mathematics, public administration, economy, statistics, philosophy, and many other fields. He remained most famous, however, for his contributions in the areas of human cognition, artificial intelligence, and economic thought.

Psychology

Administrative Behavior was Herbert Simon’s doctoral dissertation and his first book. It served as the foundation for his life's work. The book addresses a wide range of human behaviors, cognitive abilities, management techniques, personnel policies, training goals and procedures, specialized roles, criteria for evaluation of accuracy and efficiency, and all of the ramifications of communication processes. The centerpiece of the book, however, is the behavioral and cognitive processes of making rational human choices - decisions.

Any decision involves a choice, selected from a number of alternatives, directed toward organizational goals or sub-goals. Realistic options will include personnel actions or non-actions, modified by environmental facts and values, and will have real consequences. Sometimes, however, the alternatives may be influenced by our conscious or unconscious decisions, some of the consequences may be unintended, and some of the means and ends may be imperfectly differentiated, incompletely related, or poorly detailed. The task of rational decision making is to select the alternative that results in the more preferred set of all the possible consequences. This task can be divided into three required steps: (1) the identification and listing of all the alternatives; (2) the determination of all the consequences resulting from each of the alternatives; and (3) the comparison of the accuracy and efficiency of each of these sets of consequences. Any individual or organization attempting to implement this model in a real situation would be unable to comply with the three requirements, because it is highly improbable that one could know all the alternatives, or all the consequences that follow each alternative. Thus, human beings, restricted within the limits of their knowledge, have developed some working procedures that partially overcome these difficulties. These procedures consist of isolating from the rest of the world a limited number of variables and based on them calculating all possible consequences. Based on that, we make decisions.

Authority is a well studied, primary mark of organizational behavior, and is straightforwardly defined in the organizational context as the ability and right of an individual of higher rank to determine the decision of an individual of lower rank. The actions, attitudes, and relationships of the dominant and subordinate individuals constitute components of role behavior that can vary widely in form, style, and content, but do not vary in the expectation of obedience by the one of superior status, and willingness to obey from the subordinate. Authority is highly influential on the formal structure of the organization, including patterns of communication, sanctions, and rewards, as well as on the establishment of goals, objectives, and values of the organization.

Decisions can be complex admixtures of facts and values. Information about facts, especially empirically proven facts or facts derived from specialized experience, is more easily transmitted in the exercise of authority than are the expressions of values. Simon is primarily interested in seeking identification of the individual employee with the organizational goals and values. A person may identify himself with any number of social, geographic, economic, racial, religious, familial, educational, gender, political, and sports groups. Indeed, the number and variety are unlimited. The fundamental problem for organizations is to recognize that personal and group identifications can either facilitate or obstruct correct decision making for the organization. A specific organization has to deliberately determine and specify in appropriate detail and clear language its own goals, objectives, means, ends, and values. Organizational inducements, rewards, and sanctions are all designed to form, strengthen, and maintain this identification.

The correctness of decisions is measured by two major criteria: (1) adequacy of achieving the desired objective; and (2) the efficiency with which the result was obtained. Many members of the organization may focus on adequacy, but the overall administrative management must pay particular attention to the efficiency with which the desired result was obtained.

Artificial Intelligence

Simon was a pioneer in the field of artificial intelligence. Together with Allen Newell he created the Logic Theory Machine (1956) and the General Problem Solver (GPS) (1957) programs. GPS was possibly the first method of separating problem solving strategy from information about particular problems. Both programs were developed using the Information Processing Language (IPL), developed by Newell, Cliff Shaw and Simon. Simon also collaborated later with James G. March on several works in organization theory.

With Allen Newell, Simon developed a theoretical construct for the simulation of human problem-solving behavior, using production rules. The study of human problem solving required new kinds of human measurement, so Simon, Newell, and colleagues helped to develop the experimental technique of verbal protocol analysis. Simon was interested in the role of knowledge in expertise. He said that to become an expert required about 10 years of experience and he and colleagues estimated that expertise was the result of learning roughly 50,000 chunks of information. A chess expert was said to have learned about 50,000 chunks or chess position patterns. For his 20 years of work Simon was awarded the ACM's A.M. Turing Award, along with Allen Newell, in 1975.

Economics

Herbert Simon has been credited for revolutionary changes in microeconomics. He is responsible for the concept of organizational decision-making as it is known today. He was also the first to discuss this concept in terms of uncertainty; i.e. it is impossible to have perfect and complete information at any given time to make a decision. While this notion was not entirely new, Simon is best known for its origination. It was in this area that he was awarded the Nobel Prize in 1978.

At the Cowles Commission, Simon’s main goal was to link economic theory to mathematics and statistics. His main contributions were to the fields of general equilibrium and econometrics. He was greatly influenced by the marginalist debate that began in the 1930s. The popular work of the time argued that it was not empirically apparent that entrepreneurs needed to follow the marginalist principles of profit-maximization/cost-minimization in running organizations. The argument went on to note that profit-maximization was not accomplished, in part, because of the lack of complete information. In decision-making, Simon believed that agents face uncertainty about the future and costs in acquiring information in the present. These factors limit the extent to which agents can make a fully rational decision, thus they possess only “bounded rationality” and must make decisions by “satisficing,” or choosing that which might not be optimal but which will make them happy enough.

Simon was known for his research on industrial organization. He argued that the internal organization of firms and the external business decisions thereof did not conform to the Neo-classical theories of “rational” decision-making. Simon wrote myriad articles on the topic over the course of his life mainly focusing on the issue of decision-making within the behavior of what he termed “bounded rationality.” “Rational behavior, in economics, means that individuals maximize some target function under the constraints they face (e.g., their utility function) in pursuit of their self-interest. This is reflected in the theory of (subjective) expected utility. The term bounded rationality is used to designate rational choice that takes into account the cognitive limitations of both knowledge and cognitive capacity. Bounded rationality is a central theme in behavioral economics. It is concerned with the ways in which the actual decision-making process influences decisions. Theories of bounded rationality relax one or more assumptions of standard expected utility theory”.

Simon claimed that the best way to study these areas was through computer simulation modeling. As such, he developed an interest in computer science. Herbert Simon's main interests in computer science were in artificial intelligence, human-computer interaction, principles of the organization of humans and machines is information processing systems, the use of computers to study (by modeling) philosophical problems of the nature of intelligence and of epistemology, and the social implications of computer technology. Some of Simon's economic research was directed toward understanding technological change in general and the information processing revolution in particular.

Legacy

Simon’s theories in microeconomics are widely used today. His proposal of the firm as "satisficing", rather than "maximizing" agent, is the base of the industrial organization today, and is an integral part of the so-called "New Institutionalist Economics".

With his pioneering work on computer simulation models that can solve problems, Simon can be regarded as one of the founders of the field of artificial intelligence. He influenced numerous researchers to continue in his steps.

Simon's contributions to research in the area of decision-making have become increasingly mainstream in the business community thanks to the growth of management consulting. Furthermore, with his work on decision-making he made significant contributins to the field of cognitive psychology.

Bibliography

  • Simon, Herbert A. 1957. Models of Man. Wiley & Sons.
  • Simon, Herbert A. 1976 (original work from 1947). Administrative Behavior: A Study of Decision-Making Processes in Administrative Organizations, (3rd Ed). The Free Press. ISBN 0029289718
  • Simon, Herbert A. 1977. Models of Discovery (Boston Studies in the Philosophy of Science). Springer. ISBN 9027708126
  • Simon, Herbert A. 1980. Models of Thought, (Vol. 1 and 2). Yale University Press. ISBN 0300024320
  • Simon, Herbert A. 1982. Models of Bounded Rationality, (Vol. 1 and 2). MIT Press. ISBN 0262690861
  • Simon, Herbert A. 1983. Reason in Human Affairs. Stanford University Press. ISBN 0804711798
  • Simon, Herbert A. 1991. Models of My Life. BasicBooks, Sloan Foundation Series. ISBN 0465046401
  • Simon, Herbert A. 1991. Organizations and markets. Journal of Economic Perspectives, 5(2), 28.
  • Simon, Herbert A. 1996. The Sciences of the Artificial, (3rd Edition). MIT Press. ISBN 0262691914
  • Simon, Herbert A. 1997. Models of Bounded Rationality, (Volume 3). MIT Press. ISBN 0262193728
  • Simon, Herbert A. 1998. An Empirically-Based Microeconomics, Cambridge University Press. ISBN 0521624126
  • Simon, Herbert A.; Langley, Pat; Bradshaw, Gary & Zytkow, Jan. 1987. Scientific Discovery: Computational explorations of the creative processes. MIT Press. ISBN 0262620529

Reference

  • Augier, Mie & March, James G. 2004. Models of a Man: Essays in Memory of Herbert A. Simon. The MIT Press. ISBN 0262012081
  • Courtois, Pierre J. 1977. Decomposability: Queuing and computer system applications. New York: Academic Press. ISBN 012193750X
  • March, James G. 1958. Organizations. New York: Wiley & Sons. ISBN 0471567930

External links

Where Cognitive Science Meets Literary Criticism] – Simon’s article “Literary Criticism: A Cognitive Approach” from Stanford Humanities Review, 1995, with peer reviews and critique

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