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.

BREAKING DOWN '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 Expectations Theory

    The rational expectations theory posits that individuals make ...
  2. Douglass C. North

    An American economist and winner of the 1993 Nobel Memorial Prize ...
  3. James Tobin

    An American economist who won the Nobel Memorial Prize in Economics ...
  4. Simon Kuznets

    Simon Kuznets, a Russian-American economist, was awarded the ...
  5. Asset Rationalization

    Asset rationalization is the process of reorganizing a firm's ...
  6. Daniel Kahneman

    Daniel Kahneman is a professor emeritus of psychology and public ...
Related Articles
  1. Managing Wealth

    Top 5 Positions in Jim Simon's Portfolio

    Learn about the five largest positions in quant king Jim Simons' portfolio and the number of shares of common stock that he owns in each of these five companies.
  2. Insights

    Where Does the Nobel Prize Money Come From?

    The cash award associated with the Nobel Prize has changed in value considerably since the first awards in 1901. How does the Nobel Foundation invest its money?
  3. Insights

    Harvard and MIT Professors Win Nobel Memorial Prize in Economics

    British economist Oliver Hart, 68, and Finnish economist Bengt Holmström, 67, were honored with the award today for their contributions to contract theory.
  4. Investing

    Former Walmart CEO Calls for Amazon Breakup

    Former Walmart CEO Bill Simon says Amazon's business practices are 'predatory' and 'not right.'
  5. Financial Advisor

    Jim Simons: Justifying a 5% Management Fee

    Find out how Jim Simons of Renaissance Technologies is able to justify a 5% management fee at a time when many hedge funds are cutting their fees.
  6. Trading

    Understanding Investor Behavior

    Discover how some human tendencies can play out in the market, posing the question: are we really rational?
  7. Insights

    4 Billionaires Who Graduated from MIT

    Discover several of the wealthiest business people to have graduated from the Massachusetts Institute of Technology, and learn how they made their fortunes.
  8. Insights

    The Uncertainty Of Economics: Exploring The Dismal Science

    Learning about the study of economics can help you understand why you face contradictions in the market.
RELATED FAQS
  1. What does the Efficient Market Hypothesis have to say about fundamental analysis?

    Find out what the efficient markets hypothesis has to say about fundamental analysis and how recent finance research has ... Read Answer >>
  2. What are the differences between weak, strong and semi-strong versions of the Efficient ...

    Discover how the efficient market theory is broken down into three versions, the hallmarks of each and the anomalies that ... Read Answer >>
  3. What is the homo economicus?

    Homo economicus or "economic man" is the characterization of man in some economic theories as a rational person who pursues ... Read Answer >>
  4. Are perfect competition models in economics useful?

    Take a look at some of the arguments made by the proponents and critics of the theory of perfect competition in contemporary ... Read Answer >>
  5. Has the Efficient Market Hypothesis been proven correct or incorrect?

    Explore the efficient market hypothesis and understand the extent to which this theory and its conclusions are correct or ... Read Answer >>
  6. What is the difference between accounting and economics?

    Discover the difference between accounting and economics by comparing and contrasting the financial discipline of accounting ... Read Answer >>
Hot Definitions
  1. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  2. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  3. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
  4. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...
  5. Dividend

    A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
  6. Inventory Turnover

    Inventory turnover is a ratio showing how many times a company has sold and replaces inventory over a period.
Trading Center