Bounded Rationality, Abstraction, and Hierarchical Decision-Making: An Information-Theoretic Optimality Principle

ion and hierarchical information processing are hallmarks of human and animal intelligence underlying the unrivaled flexibility of behavior in biological systems. Achieving such flexibility in artificial systems is challenging, even with more and more computational power. Here, we investigate the hypothesis that abstraction and hierarchical information processing might in fact be the consequence of limitations in information-processing power. In particular, we study an information-theoretic framework of bounded rational decision-making that trades off utility maximization against information-processing costs. We apply the basic principle of this framework to perception-action systems with multiple information-processing nodes and derive bounded-optimal solutions. We show how the formation of abstractions and decision-making hierarchies depends on information-processing costs. We illustrate the theoretical ideas with example simulations and conclude by formalizing a mathematically unifying optimization principle that could potentially be extended to more complex systems.