Herbert Simon, 1916-2001, was an American social scientist that performed research in many fields, including political science, economics, sociology, and psychology. Herbert Simon's contributions to the field of economics are very interested. He is most famous for his theories on bounded rationality. Interestingly, he preferred to call his theories "satisficing", combining the words "satisfy" and "suffice" to attempt to explain the reasoning behind the human mind's cognitive limits for processing information. A major part of his research was his theory that individuals do not attempt to maximize their benefits from particular situations because of the near-impossibility of doing so. He maintained that not only would it be incredibly difficult for an individual to obtain all the information needed to perform such a process, the human mind simply isn't capable to process all this information for every situation. This was important because it was able to effectively explain human's tendency to settle for products or services that were satisfactory while not necessarily maximizing benefits; for example, such as buying a car you felt was affordable in one day rather than waiting one week to properly compare different vehicles at different dealerships.
I was unaware of Herbert Simon's significance to the field of economics before I enrolled in this course, and have learned much about him since. Herbert Simon's research is important to the study of the economics of organizations because it helps to explain why managers of organizations don't always make choices that maximize their benefits and make choices that satisfy simple goals because it is easier.
While Coase is the "father of the field" with his paper on the Nature of the Firm dating back to 1937, Simon is really the one who made the argument that we need a separate theory of how organizations work that is quite different from the theory of the consumer. In the neoclassical model, the differences between the conception of the consumer and the conception of the firm are not that great. This makes the most sense for a proprietorship, but makes little to no sense for a major multinational corporation. Simon's Nobel lecture illuminates on these themes. If you have a chance to read it, it is very worthwhile.
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