Bounded Rationality

The idea that humans are rational, within our cognitive limits - there are biological limitations to our ability to process information.

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Key Insights & Principles

Decision Making

1. Humans have limitations to the amount of information we can process.
2. Bounded Rationality can result in the use of heuristics (mental shortcuts) and biases (deviations from rationality) in decision making.
3. Bounded rationality can result in 'satisficing': choosing the first option that meets minimum criteria rather than finding the best solution.

1. Make information easier to access and understand.
2. Simplify choices.
3. Improve the tools used to make decisions.

Book References