Economics Bounded Rationality Questions
The relationship between bounded rationality and cognitive biases is that bounded rationality refers to the idea that individuals have limited cognitive abilities and information processing capabilities, which leads to the use of simplified decision-making strategies. Cognitive biases, on the other hand, are systematic errors in thinking that can occur due to these limitations in rationality. In other words, bounded rationality can contribute to the occurrence of cognitive biases as individuals may rely on heuristics or mental shortcuts that can lead to biased decision-making.