Case study - Eco For Strat Decisions
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BoundaryR.pptxBounded Rationality
Definition- a concept that portraits the limitations of rational thinking in decision making processes. It describes the boundaries experienced by individuals facing the choice to move forward or not with a certain transaction.
Developed by Herbert Simon, an economist and Nobal Prize winner, by intending to describe factors that played a key in decision-making process and how rationality impairs certain choices.
The idea that in decision-making, rationality of individuals is limited
Experiences by the person making a choice 3 Essential Limitations
Availability of Information
Not enough or unreliable information
Cognitive Limitations
Limits of the human brain to process every piece of the information and consider every possibility
Impact of emotions in decision making
Time Boundaries
Amount of time to make the decision
References
“Bounded Rationality: Economics.” tutor2u, https://www.tutor2u.net/economics/topics/bounded-rationality.
What Is Bounded Rationality? - Definition: Meaning: Example. https://www.myaccountingcourse.com/accounting-dictionary/bounded-rationality.
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