Thermodynamics as a theory of decision-making with information processing costs

Perfectly rational decision-makers maximize expected utility, but crucially ignore the resource costs incurred when determining optimal actions. Here we propose an information-theoretic formalization of bounded rational decision-making where decision-makers trade off expected utility and information processing costs. Such bounded rational decision-makers can be thought of as thermodynamic machines that undergo physical state changes when they compute. Their behavior is governed by a free energy functional that trades off changes in internal energy-as a proxy for utility-and entropic changes representing computational costs induced by changing states. As a result, the bounded rational decision-making problem can be rephrased in terms of well-known concepts from statistical physics. In the limit when computational costs are ignored, the maximum expected utility principle is recovered. We discuss the relation to satisficing decision-making procedures as well as links to existing theoretical frameworks and human decision-making experiments that describe deviations from expected utility theory. Since most of the mathematical machinery can be borrowed from statistical physics, the main c

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