Bounded rationality is a theory in decision-making that suggests that rationality is limited when individuals make decisions. People tend to select decisions that are satisfactory rather than optimal when faced with limitations such as the difficulty of the problem, cognitive capability, and the time available to make the decision. While economists once assumed that people make fully rational decisions, the theory of bounded rationality shows that this is not always the case. Instead, bounded rationality considers the limits of our rationality, allowing us to better understand the ways in which we make decisions in everyday life. Read More