Economics Bounded Rationality Questions
Bounded rationality impacts the study of behavioral game theory by recognizing that individuals have limited cognitive abilities and information processing capabilities. This means that individuals may not always make fully rational decisions in game situations, but instead rely on simplified decision-making strategies or heuristics. Bounded rationality acknowledges that individuals may not always maximize their own utility or make optimal choices, and instead focuses on understanding and predicting the actual decision-making behavior observed in games.