Bounded Rationality

Discipline: Economics

Bounded rationality is a principle about decision making. It holds that there are cognitive limits to the knowledge of economic actors, such as manufacturers and consumers. They can therefore act rationally only up to a limit. In other words, their rationality is bounded.

Bounded rationality principle is developed by the American behaviorist Herbert Simon (1916-2001).

Also see: bernouilli's hypothesis, uncertainty

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