# Natural abstractions through bounded rationality

### Overview

This article builds on the previous research article bounded rationality, which provides a basic introduction to bounded rationality and the information-theoretic framework for bounded rational decision making and inference. If you’re unfamiliar with the information-theoretic framework for bounded rationality it might be useful to start with the previous article.

### The optimal prior

The basic (free energy) principle of bounded rationality (introduced in the previous research article) formalizes a trade-off between large expected utility and low computational cost. The principle assumes a prior or initial policy over actions (before computation). Through computation the prior is transformed into a posterior policy. Here, the basic principle is extended by searching for the optimal prior.

When considering a single world-state , the optimal prior is trivial to find, it is given by the optimal posterior (that deterministically maximizes utility). A more interesting question is which distribution over actions is optimal *on average* across all . This leads to the following optimization problem:

The solution to the optimization over the prior is independent of the posterior and is given by the marginal:

Plugging this result back into the optimization problem leads to:

where denotes the mutual information between the random variables and which is given as the average KL-divergence between and .

The new optimization problem formalizes again a trade-off between high expected utility and low computational demand, however, the computational demand is now measured through the mutual information (an *average* KL divergence). The inverse temperature still plays the role of translating computational demand into a *cost of computation* and thus governs the trade-off between the two terms.

### Closed-form solution

Similar to the free-energy case in the previous article, the optimization problem has a closed-form solution - in the form of two self-consistent equations:

with the partition sum .

The solutions can be obtained from arbitrary initializations by iterating the two equations until convergence - this scheme is known in information theory as the Blahut-Arimoto algorithm and is guaranteed to converge to the correct solution.

### Abstractions and lossy compression

Perhaps surprisingly, the optimization problem presented above is mathematically equivalent to the optimization problem in **rate-distortion theory**, the information-theoretic framework for *lossy compression*. In rate-distortion theory, the goal is to transmit information over a channel of insufficient capacity in order to minimize a distortion function (equivalent to maximizing a utility function). Since the channel capacity is insufficient, some information must be discarded, which in turn means that the mutual information between input and output of the channel is upper-bounded. Rate-distortion theory formalizes how to discard irrelevant information and transmit the most relevant information in order to minimize distortion as far as possible.

In the principle for bounded rational decision-making, the goal is very similar: information about must be processed in order to pick a good action . Since the agent has limited computational capacity and cannot process fully, it should process the most relevant information about in order to maximize utility. Thus the problems of optimal lossy compression and optimal bounded rational decision-making are not only mathematically strongly related, but also conceptually.

Interestingly, the rate-distortion principle for bounded rational decision-making leads to the emergence of natural abstractions: in order to keep the mutual information between world-states and actions low, the decision-maker cannot afford to pick actions that are very specific and thus *informative* about a world-state. Rather, the decision-maker favors actions that are “good” under a number of world-states, thus treating several world-states as if they were the same (by responding to all of them with the same policy). This leads to the emergence of abstractions where certain different are treated as if they were the same. Importantly, the abstractions emerge from the structure of the utility function and their granularity is driven by the computational resources of the agent (governed by the inverse temperature ).

##### Further reading

An intuitive example for the emergence of abstractions and a more in-depth discussion can be found in this paper. The paper contains an example - showing how different natural levels of abstraction emerge, depending on - in the form of a Jupyter notebook (use this link if you simply want to view the notebook in your browser).