Bounded rationality
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Bounded rationality is the idea that when individuals make decisions, their rationality is limited by the tractability of the decision problem, the cognitive limitations of their minds, and the time available to make the decision. Decision-makers in this view act as satisficers, seeking a satisfactory solution rather than an optimal one. Herbert A. Simon proposed bounded rationality as an alternative basis for the mathematical modeling of decision-making, as used in economics, political science and related disciplines. It 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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See also
- Altruism
- Austrian economics
- Behavioral economics
- Homo economicus
- Irrationality
- Neoclassical economics
- Psychohistory
- Rational choice theory
- Parametric determinism
- Rational ignorance
- Satisficing
- Carnegie School
- Utility maximization problem
- Transaction cost
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