The concept of bounded willpower may explain why many of us are better shoppers than savers. [Image: CC0 Public Domain, https://goo.gl/m25gce]
Bounded rationality served as the integrating concept of the field of behavioral decision research for 40 years. Then, in 2000, Thaler (2000) suggested that decision making is bounded in two ways not precisely captured by the concept of bounded rationality. First, he argued that our willpower is bounded and that, as a consequence, we give greater weight to present concerns than to future concerns. Our immediate motivations are often inconsistent with our long-term interests in a variety of ways, such as the common failure to save adequately for retirement or the difficulty many people have staying on a diet. Second, Thaler suggested that our self-interest is bounded such that we care about the outcomes of others. Sometimes we positively value the outcomes of others—giving them more of a commodity than is necessary out of a desire to be fair, for example. And, in unfortunate contexts, we sometimes are willing to forgo our own benefits out of a desire to harm others.
My colleagues and I have recently added two other important bounds to the list. Chugh, Banaji, and Bazerman (2005) and Banaji and Bhaskar (2000) introduced the concept of bounded ethicality, which refers to the notion that our ethics are limited in ways we are not even aware of ourselves. Second, Chugh and Bazerman (2007) developed the concept of bounded awareness to refer to the broad array of focusing failures that affect our judgment, specifically the many ways in which we fail to notice obvious and important information that is available to us.
A final development is the application of judgment and decision-making research to the areas of behavioral economics, behavioral finance, and behavioral marketing, among others. In each case, these fields have been transformed by applying and extending research from the judgment and decision-making literature.