Great, I learnt a new word ‘Satisfice’. A few moments ago I still lived in the delusion that ‘Satisfice’ meant the same as ‘Satisfy’ but it cannot possibly be. It has the similar kind of essence as the term it resembles but it meant something deeper, more sophisticated and much more specific. The aspect of the term I am most concerned about is it’s vaue in the study of Economics, so I ‘answer.comed’ it and found the following:
In economics, satisficing is a behaviour which attempts to achieve at least some minimum level of a particular variable, but which does not strive to achieve its maximum possible value. The most common application of the concept in economics is in the behavioural theory of the firm, which, unlike traditional accounts, postulates that producers treat profit not as a goal to be maximized, but as a constraint. Under these theories, although at least a critical level of profit must be achieved by firms; thereafter, priority is attached to the attainment of other goals.
The word satisfice was coined by Herbert Simon in 1957. Simon says that people are only ‘rational enough’, and in fact relax their rationality when it is no longer required. This is called bounded rationality.
Some consequentialist theories in moral philosophy use the concept of satisficing in the same sense, though most call for optimization instead.
In an attempt to describe the world better, we invent terms, and for the Economists, we have to come up with simplification of scenarios. In the case of ‘Satisficing’, we realised our classical theory that assumes we are perfectly able to achieve what we want – or at least it seems. In reality, we have to settle for something less everytime and not being able to make up our minds meant that the second best alternative used for measuring opportunity cost does not really exist (because you have ‘many other’ alternatives) and moreover, your option is usually not the best choice made – at least in restrospect (which is why we have a term to describe this phenomenon and it is known as ‘regret’).
The concept of bounded rationality is not new – in fact, all students of economics who have not learnt about it would have a sense of it already because the concept of economic rationality is somehow flawed. I wanted to write the article ‘When Smith meets Kant’ but haven’t got the chance to. It’s going to be a long treatise to reconcile the concept of self-deception, reality, morality, economics and perhaps all questions that lies fundamentally in how decisions are being made based on a variety of theories. It relates very much to the question of rationality. In essence, we have absolutely no idea what rationality is. We may have a degree of knowledge about it, but not sufficient to quantify all decision making in the world. The concept of insane is also frequently misunderstood to be a lack of rationality. I would think it is more like a ‘postponed rationality’ because our perception of the world changes with time and so is the idea of rationality.
Back to the topic of how imperfect the world is, it is unrealistic to learn about the perfect world actually. For if we cannot get to the ideal, do not want to make use of the ideal, know about the consequences of the ideal which we do not want to befall on us, and have clear idea of the disadvantage of what is known and thought to be ideal, then there’s no point even constructing it in the first place. If you know your stuff, you know I am referring to concepts of Market Structures that forces us to think about the Perfect Markets. I guess we all know about the Perfect Competition and the merits of it. We think it is best market structure because it is perceived to maximise utility in peaceful, unregulated conditions. Unfortunately, if you see hard enough, you will realised that a Perfect Competition Market Structure raptured by an economic recession is never going to recover and I guess I don’t have to elaborate on these facts of life.
We withhold what thought to be the essence of the ideal when in fact, there’s no such thing because of the way what is ‘idea’ is defined. In my opinion, those ‘ideal’ scenarios should not have any conceivable disadvantages and must not be attacked in any way to render it as not being ideal anymore. As such, nothing can be ideal and perhaps in Economics, we should cease considering such kind of knowledge. The models we know of and reject as ideal are mere product of the imaginative mind that persuades us that things that do not occur are ideal and perfect – which cannot be true because it would have pose a strong incentive for us to work towards it, when we are not. Let us then, settle for the less ‘ideal’.