Problem formulation and alternative generation in the decision making process

Abstract: "Classical and neoclassical economic theory, as well as statistical decision theory, through their neglect of human bounded rationality -- the vast disparity between human computing capabilities and the complexity of our world -- both give a seriously distorted picture of human decision making and omit at least three components of the decision making process that are of central importance. In this paper, I will outline what is known, today, about these neglected aspects of human decision-making. A great deal is known, mainly as a result of the progress of cognitive science in the last generation. Economics can make rapid progress by drawing upon this storehouse of new knowledge to reconstruct and expand its foundations.