Secondary Bounded Rationality: A Theory of How Algorithms Reproduce Structural Inequality in AI Hiring

Abstract: AI-driven recruitment systems, while promising efficiency and objectivity, often perpetuate systemic inequalities by encoding cultural and social capital disparities into algorithmic decision making. This article develops and defends a novel theory of secondary bounded rationality, arguing that AI systems, despite their computational power, inherit and amplify human cognitive and structural biases through technical and sociopolitical constraints. Analyzing multimodal recruitment frameworks, we demonstrate how algorithmic processes transform historical inequalities, such as elite credential privileging and network homophily, into ostensibly meritocratic outcomes. Using Bourdieusian capital theory and Simon's bounded rationality, we reveal a recursive cycle where AI entrenches exclusion by optimizing for legible yet biased proxies of competence. We propose mitigation strategies, including counterfactual fairness testing, capital-aware auditing, and regulatory interventions, to disrupt this self-reinforcing inequality.