Valuation models and Simon's bounded rationality
AUTOR(ES)
Godoi, Alexandra Strommer de Farias
FONTE
Brazilian Journal of Political Economy
DATA DE PUBLICAÇÃO
2009-09
RESUMO
This paper aims at reconciling the evidence that sophisticated valuation models are increasingly used by companies in their investment appraisal with the literature of bounded rationality, according to which objective optimization is impracticable in the real world because it would demand an immense level of sophistication of the analytical and computational processes of human beings. We show how normative valuation models should rather be viewed as forms of reality representation, frameworks according to which the real world is perceived, fragmented for a better understanding, and recomposed, providing an orderly method for undertaking a task as complex as the investment decision.
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