Economics Bounded Rationality Questions
Bounded rationality in economics refers to the idea that individuals and organizations make decisions based on limited information, cognitive limitations, and time constraints. It recognizes that decision-makers cannot always gather and process all available information, leading to suboptimal decision-making.
In the context of human resources, bounded rationality acknowledges that HR professionals and managers also face limitations in their decision-making processes. They may have limited information about job candidates, employee performance, or market conditions. Additionally, cognitive biases and time constraints can influence their decision-making.
Bounded rationality in human resources recognizes that HR decisions, such as hiring, promotions, or performance evaluations, may not always be perfectly rational or objective. Instead, they are influenced by subjective factors, heuristics, and biases. This understanding highlights the importance of considering these limitations and implementing strategies to mitigate their impact, such as using structured interviews, objective performance metrics, and diversity initiatives.