Encouraging prospective students to make ‘better’ decisions about higher education is a concern of many governments, especially in countries where rapid marketisation is differentiating the sector and adding to the envelope of choices available. One element of this concern is often about whether disadvantaged young people apply to university, the courses they select and where they choose to study. There may be a tacit assumption that students are poor consumers within the marketplace and that this needs policy intervention. However, the same processes that are driving the creation of new choices also makes it increasingly difficult for young people to make those choices, with uncertainty economic and social rewards from higher education. This paper will focus its attention on the work of two internationally-relevant scholars: American Herbert Simon and Israeli Daniel Kahneman. Both are Nobel Laureates in economics, but their work actually focuses on the psycho-social elements of individuals making complex decisions where events and outcomes are uncertain. The relevance of this to decisions around higher education is readily apparent, but their theoretical insights have rarely been used in this field. Simon’s (1955, 1979, 1987, 2000 theory of ‘bounded rationality’ lies at the heart of this: ‘Rationality is bounded when it falls short of omniscience. And the failures of omniscience are largely failures of knowing all the alternatives, uncertainty about relevant exogenous events, and inability to calculate consequences’ (Simon, 1979, p. 502). Bounded rationality does not argue that decisions and the people taking them are inherently irrational, but that there are realistic limits on the ability of people to weigh complex options in a fully logical and objective way. Kahneman’s development of Simon’s work culminated in ‘prospect theory’ (Kahneman and Tversky, 1979; Kahneman, 2003, 2011), which has experimentally demonstrated that complex decisions tend to be intuitive, emotionally grounded, rely on stereotypes and be short-term in nature: ‘the long term is not where life is lived’ (Kahneman, 2003, p.1457). The paper will summarise recent attempts (Harrison, 2017) to apply Simon and Kahneman’s work to higher education decisions, focusing on the information and guidance that is available to young people about the financial and other returns from higher education given the uncertainties surrounding future graduate employment. It will also problematise some of the widely-held assumptions about the ‘riskiness’ of higher education for disadvantaged groups, repositioning risk attitudes more in social terms rather than financial ones, examining how normative expectations shape decisions.

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