What do you mean by bounded rationality?

Bounded rationality is a concept that acknowledges the limitations of human rationality when making decisions. It recognizes that individuals are not always completely rational and may have cognitive constraints that prevent them from considering all available information or analyzing it objectively. Instead, people may resort to heuristics or mental shortcuts to simplify complex decision-making tasks, which can result in biased or suboptimal outcomes. Bounded rationality acknowledges that individuals often have incomplete information, limited cognitive resources, and are influenced by emotions, values, and social factors, all of which can impact their decision-making process. Therefore, individuals may make decisions that are “good enough” or satisfactory based on their available resources and cognitive constraints rather than being fully rational.

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