> An ability to operate reasonably effectively under the constraints of bounded rationality is an ingredient of competence.
Sure, and that’s a reasonable argument for the claim that the less senior manager with the budget is competent if she refuses to reduce it, because she understands that it will not be increased again after the crisis is over.
But it’s not a good reason to call the senior manager who doesn’t understand the situation “competent”. The root cause of problem is that her rationality is too bounded, which I would prefer to call “incompetence”.
> But it’s not a good reason to call the senior manager who doesn’t understand the situation “competent”.
I'm not so sure that this is actually true... It certainly seems like a certain flavor/kind of "competency", for a manager to wander into unfamiliar territory, or come across an unfamiliar topic, and to have the wherewithal to then say, "well I don't understand why we have a $10M budget, and I don't understand what will happen if we reduce it to a $6M, gee my rationality is extremely bounded... but I know enough about management in general, to know that making big changes is risky, and all my underlings keep telling me that cutting budget to $6M is a terrible idea --> therefore, despite my too-bounded rationality, I will be competent enough to realize that not changing anything is the safer path (even if I don't fully understand why, and even if I have no crystal ball to predict next year's budget process)"
Maybe you would just call that having "self-awareness of their own bounds"? And if you have self-awareness than maybe that automatically disqualifies you from being "too bounded"? But absent arbitrary semantic rules like that, the ability to make wise choices with imperfect understanding or large gaps in knowledge, is itself a demonstrable and valuable skill that some people have, others can learn, and also some that will utterly fail to ever grok.
Sure, and that’s a reasonable argument for the claim that the less senior manager with the budget is competent if she refuses to reduce it, because she understands that it will not be increased again after the crisis is over.
But it’s not a good reason to call the senior manager who doesn’t understand the situation “competent”. The root cause of problem is that her rationality is too bounded, which I would prefer to call “incompetence”.