Beyond optimization: overcoming the limitations of individual rationality

Von Neumann-Morgenstern game theory is the multi-agent instantiation of individual rationality, and is the standard for decision-making in group settings. Individual rationality, however, requires each player to optimize its own performance, regardless of the effect so doing has on the other players. This feature limits the ability of game theory as a design paradigm for group behavior where coordination is required, since it cannot simultaneously accommodate both group and individual preferences. By replacing the demand for doing the best thing possible for the individual with a mathematically precise notion of being "good enough," satisficing game theory allows both group and individual interests to be simultaneously accommodated.