Economics Bounded Rationality Questions
Bounded rationality impacts the study of experimental economics by recognizing that individuals have limited cognitive abilities and information processing capabilities. This means that individuals may not always make fully rational decisions and may rely on heuristics or simplified decision-making strategies. Experimental economics takes into account these limitations and designs experiments to understand how individuals make decisions under these constraints. It helps to identify deviations from rational behavior and provides insights into the factors that influence decision-making in real-world economic situations.