Herbert A. Simon was Professor of Computer Science and Psychology at Carnegie Mellon University and one of the founding fathers of artificial intelligence, cognitive psychology, and modern decision science. His pioneering research challenged the assumption that humans are perfectly rational decision-makers, introducing instead the concept of bounded rationality鈥攖he idea that people satisfice rather than optimize due to cognitive limitations and incomplete information. Simon's interdisciplinary work spanned economics, computer science, psychology, and organizational theory, fundamentally reshaping how we understand human choice and organizational behavior.

In 1978, Simon was awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for his pioneering research into the decision-making process within economic organizations. His landmark book 鈥淎dministrative Behavior鈥, first published in 1947, was named Book of the Half Century by Public Administration Review and referred to by the Nobel Committee as epoch-making. Simon's vision of machines capable of performing any intellectual task a human can do proved remarkably prescient, and his work on artificial intelligence and computational models of human cognition continues to influence fields from economics to computer science to public administration.

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Herbert Simon: The founding father of AI who predicted the future of machines and the importance of data

Herbert Simon was one of the founding fathers of artificial intelligence. No other scientist better understood the future of machines and the ultimate importance of computers. By 1965, Simon was certain that 鈥渕achines will be capable of doing any work a man can do.鈥 His visionary perspective on decision making processes, climate change and flaws in聽economic聽theories prove to be even more relevant and crucial in the 21st century. Today, we can still learn from his genius and are maybe more capable of understanding the trends Simon had predicted in the 1960s. He takes us into the past to provide us with the answers to our future.

What makes decision-making so difficult?

Simon lived life in an unusual, unique way. He didn鈥檛 watch television, nor did he listen to the radio or pay聽attention to newspapers鈥 headlines. "First, a lot of what鈥檚 in the paper today was in the paper yesterday," Simon said. "Second, most of the things that are in the papers today that weren鈥檛 yesterday I can predict, at least in general terms."

Convinced that the unconventional path was the right one, Simon wanted to step into an unexplored, less advanced field of scientific research. He made his move into social sciences, creating a basis for forthcoming advancements in research into decision making processes. Simon stated that people aren鈥檛 awfully good at predicting the future and that they have great difficulties comparing their own preferences.

He also described how an economy spends a lot of its efforts designing and producing products that serve as alternatives but, contrastingly, allocates very little time to choose聽among them. "Before you even start the choice process, somebody has presented you with this, and this, and this alternative," he said.

Can simple decision making be achieved by reducing the oversaturated presentation of alternatives? "Partly," argued Simon, "I think the difficulty of decision-making centers very much around the degree of uncertainty and the gaps in our knowledge."

How did Herbert Simon challenge economic theory and why did he emphasize the importance of data collection?

Underlining that economic theory and methodology needed a change, Simon focused his research on challenging existing presumptions. "For every problem, one has a theory, a way of addressing the problem," Simon pointed out. "Unfortunately, for many of the important problems in life, there鈥檚 a bad theory."

鈥淏efore you can have mathematical structures in a science, you have to have data, you have to understand the phenomenon," he said. "Before biology became modern molecular biology, with exact knowledge of genes and of chemistry, many people had to go out and collect countless plants to find out how they were put together. We haven鈥檛 done that yet in the social sciences."

He warned, inspired and motivated scientists to approach problem solving in a new way 鈥 by starting to collect as much data as possible.

What was Herbert Simon's perspective on environmental issues and what actions did he advocate for?

Simon knew the environment would become a key concern in the future and that drastic measures would be needed to ensure the survival of subsequent generations. He pointed to issues that have become more pressing in recent years, focusing on sustainable energy, taking action against pollution, and changing political processes. "What do we want for the present and what are we willing to give up in order to preserve the future?鈥 he asked.

There are problems to which we simply don鈥檛 know the answer yet, but there are some things we can take actions on now, which we should take actions on now.

What was the impact of Herbert Simon's research on decision making across various academic fields?

Simon tried to interpret correlations and understand cultures to ultimately reach a deeper comprehension of human emotions and the reasons for their decisions. "My work has not been aimed at immediately improving the decision process, but at understanding it,鈥 he said. He had influenced an extensive range of academic fields, publishing works on cognitive psychology, computer sciences, economics, mathematics and many others.

If you asked Simon the main reason behind his tremendous effort, he'd express聽his feeling of responsibility towards humanity. "You haven鈥檛 created anything until you鈥檝e communicated it,鈥 he said. 鈥淐ommunication is an essential part of the scientific activity." The enormous knowledge he acquired and shared founded a base for new computer programs, artificial intelligence and other critical areas of science.

How do we learn to grow up?

Simon鈥檚 remarkable confidence and his profound interest in humanity were features that made him stand out both professionally and personally. "Human beings get a tremendous advantage from the influence of other people around them,鈥 he said. 鈥淭hat鈥檚 the way we learn."

When asked what advice he鈥檇 give the next generation, his response was straightforward and kind. "One thing that I would like to suggest is to think about the goals one is trying to accomplish, without losing sight of the living itself,鈥 he said.

The most important thing is the journey. If we live well, then these distant goals will take care of themselves. You are not going to do anything outstanding unless you find some things that you can do with enjoyment.

One of the most important lessons one can learn from Simon is the importance of understanding data. While many people are interested in the nature of causality - what causes what - Simon concentrated on digging deeper. Rather than taking correlations as given, he tried to understand their background. He established a new approach to thinking. "Perhaps the right way to move is to understand before one predicts," he said.

What does Herbert Simon's work mean for us?

鈥淒isagreements within a large company is part of what Simon鈥檚 Nobel laureate was all about. It is also something that investors need to be doubly aware of.鈥

Paul Donovan
Global Chief Economist
麻豆社 Wealth Management

Quick facts

Born:聽1916, Milwaukee, Wisconsin, USA

Died:聽2001, Pittsburgh, Pennsylvania, USA

Field:聽Management science

Awarded: The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, 1978

Prize-winning work:聽Research into the decision-making process within economic organizations

A pleasant surprise:聽Was awarded the Nobel Prize although he hadn鈥檛 taught an economics course in decades

Joke line:聽Described himself as always trying to make people laugh. Even though, so he admitted, people sometimes got angry at his humor

Research papers

  • Administrative Behavior: A Study of Decision-Making Processes in Administrative Organization (1947, 4th edition 1997) link:
  • A Behavioral Model of Rational Choice (1955) link:
  • Organizations (1958, with James G. March) link:
  • The Sciences of the Artificial (1969, 3rd edition 1996) link:
  • Models of Bounded Rationality (1982) link:

FAQ

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