Bounded relationality: how intermediary organizations encourage consumer exchanges with routinized relational work in a social insurance market

In: Socio-economic review, Volume 18, Issue 3, p. 769-793

Abstract

AbstractUsing observations of US governmental, advocacy and human service organizations' (GAHSOs) talks, I show how these intermediary organizations endorsed 'bounded relationality' when teaching conventions about exchanges in the social insurance market. Bounded relationality synthesizes (a) Simon's argument that organizations' goals and practices help people compensate for bounded rationality—their cognitive limitations with decision-making—and (b) Zelizer's relational work, which emphasizes how social relations animate market exchanges. GAHSOs attempted to acculturate older adults and their agents to decision-making routines of information-gathering and processing consumers, savvy information-seekers and watchful monitors. GAHSOs advised routinizing relational work toward making exchanges, including layperson relational work by family members and friends and expert relational work by professionals and advocacy and human service organizations. Bounded relationality supported people's decision-making when initiating, maintaining or ending exchanges that organizations would recognize and process. By studying how intermediary actors facilitate bounded relationality, we understand how organizations encourage consumer exchanges.