Economics Bounded Rationality Questions
Bounded rationality is a concept that challenges the assumptions of rational choice theory. While rational choice theory assumes that individuals have unlimited cognitive abilities and can make optimal decisions based on complete information, bounded rationality suggests that individuals have limited cognitive abilities and are constrained by time, information, and cognitive limitations. Therefore, bounded rationality recognizes that individuals make decisions that are satisfactory or "good enough" rather than optimal. In this way, bounded rationality provides a more realistic understanding of decision-making processes, which may deviate from the assumptions of rational choice theory.