Herbert A. Simon

AAA

DEFINITION of 'Herbert A. Simon'

An American economist and social scientist who won the Nobel Memorial Prize in Economics in 1978 for his contributions to modern business economics. Herbert Alexander Simon's theory of bounded rationality says that individuals do not make perfectly rational decisions because of the difficulty of obtaining all the information needed to do so.

INVESTOPEDIA EXPLAINS 'Herbert A. Simon'

Simon was born in 1916 in Milwaukee and died in 2001. He earned his Ph.D. from the University of Chicago and taught computer science and psychology at Carnegie Mellon University. His research also focused on artificial intelligence and computer technology. The efficient market hypothesis centers around how much information an investor has to make a decision.

RELATED TERMS
  1. Rational Behavior

    A decision-making process that is based on making choices that ...
  2. Economist

    An expert who studies the relationship between a society's resources ...
  3. Rational Expectations Theory

    An economic idea that the people in the economy make choices ...
  4. Behavioral Economics

    The study of psychology as it relates to the economic decision ...
  5. Economics

    A social science that studies how individuals, governments, firms ...
  6. Head-Fake Trade

    A trade where a stock or market appears to be making a move in ...
RELATED FAQS
  1. According to the neoclassical growth theory, what factors influence the growth of ...

    The neoclassical growth theory builds five major variables into its time-sensitive production formula. The first is total ... Read Full Answer >>
  2. What industries are typically considered infant industries?

    Infant industries are those considered vulnerable to established competitors. Some examples of infant industries include ... Read Full Answer >>
  3. How is game theory related to the Nash equilibrium?

    The Nash equilibrium is an important concept in game theory referring to a stable state in a game where no player can gain ... Read Full Answer >>
  4. How can individuals or businesses handle transaction costs for economic externalities?

    Externalities, also known as external economies, and transaction costs are two significant and evolving issues in contemporary ... Read Full Answer >>
  5. How does days to cover a short position relate to a short squeeze?

    Days to cover a short position reveals the intensity and duration of a potential short squeeze. A short squeeze occurs when ... Read Full Answer >>
  6. Is it better practice to use a stop order or a limit order?

    Both stop orders and limit orders have their advantages and disadvantages; traders need to decide between the two based on ... Read Full Answer >>
Related Articles
  1. Fundamental Analysis

    How Influential Economists Changed Our History

    Find out how these five groundbreaking thinkers laid our financial foundations.
  2. Economics

    Adam Smith: The Father Of Economics

    This free thinker promoted free trade at a time when governments controlled most commercial interests.
  3. Fundamental Analysis

    4 Misconceptions About Free Markets

    These fallacies have hounded free market economists since the days of Adam Smith.
  4. Economics

    Why Can't Economists Agree?

    There are many reasons why economists can be given the same data and come up with entirely different conclusions.
  5. Options & Futures

    Why Wages Stick When The Economy Shifts

    Even economists can't agree on the impact (or even existence) of wage stickiness. So, how does it affect you?
  6. Forex Education

    Free Market Maven: Milton Friedman

    As proponent of free market capitalism, this economist changed the way the world's economies operate.
  7. Active Trading

    Giants Of Finance: John Maynard Keynes

    This rock star of economics advocated government intervention at a time of free-market thinking.
  8. Charts & Patterns

    Avoid The Perfection Trap In Trading

    Avoid the perfection trap and make peace with the market’s high levels of systematic noise.
  9. Trading Strategies

    Pros And Cons Of Paper Trading

    Most market novices should paper trade for a considerable amount of time, despite key drawbacks.
  10. Trading Strategies

    Uncovering Evidence Of Sector Rotation

    Stalk ETF performance lists over several weeks to uncover hidden institutional buying and selling strategies.

You May Also Like

Hot Definitions
  1. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  2. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  3. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  4. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  5. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  6. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!