Definition of bounded rationality
Bounded rationality is the idea that in decision-making, rationality of individuals is limited by the information they have, the cognitive limitations of their minds, and the finite amount of time they have to make a decision. It was proposed by Herbert A. Simon as an alternative basis for the mathematical modeling of decision-making, as used in economics and related disciplines. Bounded rationality complements rationality as optimization, which views decision-making as a fully rational process of finding an optimal choice given the information available.
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