LEGAL RESPONSES TO BOUNDED RATIONALITY IN GERMAN ADMINISTRATION

Abstract

Although the concept of bounded rationality has never been referred to expressly, it has long been tacitly present in German administration and in German administrative law. Since organizations may overcome many bounds to individual rationality by employing more or different persons, and since the administration often may refrain from any action for fear of less than full rationality, the question as to which bounds to rationality are accepted by the law is a normative one. German administrative law has developed institutions, both to increase the degree of rationality and to handle bounded rationality where it is accepted. These institutions may be understood and further developed in the light of the new institutional economics.