When it Pays to be Neurotic or to Have Blind Spots : The Value of Understanding External and Internal Contingencies

Over the past half century, the Carnegie School’s view of organizations as boundedly rational actors has become a cornerstone of organization theory. An important consequence of bounded rationality is that organizations must engage in a process of search and learning in order to identify and evaluate suitable choices. Indeed, bounded rationality implies that this process is itself subject to cognitive challenges. At the same time, in the Carnegie tradition, a growing body of work has employed computational methods to examine search. The intersection of these two ideas has been the nexus of significant advances in organization theory (much of which has been published by Organization Science). The objective of this panel is to take a new – and perhaps even unconventional – look at the consequences of bounded rationality. This panel focuses on bounded rationality not only as a performance-degrading impediment that must be overcome, but also as a mechanism that potentially leads to superior outcomes. The panel encompasses four papers related by these ideas. The first two papers examine benefits of bounded rationality. The last two papers explore the impact of organizational structure on learning outcomes in the presence of bounded rationality.