Economics Bounded Rationality Questions
The role of biases in bounded rationality is that they can influence decision-making and lead individuals to make suboptimal choices. Biases are cognitive shortcuts or heuristics that individuals use to simplify complex decision-making processes. However, these biases can often result in systematic errors and deviations from rationality. Some common biases include confirmation bias, availability bias, and anchoring bias. These biases can limit an individual's ability to gather and process information effectively, leading to bounded rationality.