Economics Bounded Rationality Questions
Bounded rationality relates to satisficing as it is a concept that acknowledges the limitations of human decision-making abilities. Bounded rationality suggests that individuals have cognitive limitations, such as limited information processing capacity and time constraints, which prevent them from making fully rational decisions. Satisficing, on the other hand, is a decision-making strategy that involves selecting the first option that meets a satisfactory level of criteria, rather than seeking the optimal solution. In other words, bounded rationality recognizes that individuals often settle for satisfactory decisions due to their cognitive limitations, and satisficing is a practical approach that aligns with these limitations.