Bounded rationality and Epistemic Logic

As it is well known, there exists a chasm between the picture of perfect rationality on which modern mainstream economics is by and large built, and the limited reasoning and decision making abilities displayed by real agents. Herbert Simon groundbreaking work (cf., for instance, Simon 1955) pioneered research on bounded rationality. At the onset a study of administrative and organizational behavior, after its inception the study of boundedly rational agency has flourished in a variety of areas. In decision theory, the momentous conceptual shift is from focusing on optimal behavior to focusing on satisficing behavior. Instead of maximizing her expected utility, a boundedly rational agent could adopt a satisficing heuristics: scan the possible outcomes until she retrieves one that goes over her aspiration level. A crucial theoretical element in accounts of bounded rationality, is the context of decision. In fact, decision making is only the endpoint of a process of decision that involves information gathering and knowledge processing. In prospect theory, for instance, the choice over prospects is preceded by an editing phase in which prospects, their probability and their utility is constructed. Crucial psychological evidence about the limits of human rationality points out the relevance of framing for decisions (decisions are largely dependent on the frame of reference in which options are given to the decision maker.)