Economics Bounded Rationality Questions
Bounded rationality impacts the study of social economics by recognizing that individuals and institutions have limited cognitive abilities and information processing capabilities. This means that economic agents may not always make fully rational decisions, but instead rely on simplified decision-making strategies or heuristics. Bounded rationality acknowledges that individuals may have cognitive biases and may not always have access to complete information, leading to deviations from traditional economic models. Therefore, the study of social economics takes into account these limitations and explores how individuals and institutions make decisions under bounded rationality, and how this impacts economic outcomes and behavior in society.