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{{Short description|Making of satisfactory, not optimal, decisions}}

'''Bounded rationality''' is the idea that [[Philosophy:Rationality|rationality]] is limited when individuals [[Decision-making|make decisions]], and under these limitations, rational individuals will select a decision that is [[Philosophy:Satisficing|satisfactory]] rather than optimal.<ref>{{cite journal |last1=Sent |first1=Esther-Mirjam |title=Rationality and bounded rationality: you can't have one without the other |journal=The European Journal of the History of Economic Thought |date=October 31, 2017 |volume=25 |issue=6 |pages=1370–1386 |doi=10.1080/09672567.2018.1523206 |doi-access=free|hdl=2066/199920 |hdl-access=free }}</ref>

Limitations include the difficulty of the problem requiring a decision, the cognitive capability of the mind, and the time available to make the decision. Decision-makers, in this view, act as satisficers, seeking a satisfactory solution, with everything that they have at the moment rather than an optimal solution. Therefore, humans do not undertake a full [[Cost–benefit analysis|cost-benefit analysis]] to determine the optimal decision, but rather, choose an option that fulfils their adequacy criteria.<ref name=":0">{{Cite journal|last1=Campitelli|first1=Guillermo|last2=Gobet|first2=Fernand|date=2010|title=Herbert Simon's Decision-Making Approach: Investigation of Cognitive Processes in iExperts|url=http://dx.doi.org/10.1037/a0021256|journal=Review of General Psychology|volume=14|issue=4|pages=354–364|doi=10.1037/a0021256|s2cid=6146970|issn=1089-2680}}</ref>

Some models of human behavior in the social sciences assume that [[Humans|humans]] can be reasonably approximated or described as "[[Philosophy:Rationality|rational]]" entities, as in [[Finance:Rational choice theory|rational choice theory]] or Downs' political agency model.<ref name="Olson">Mancur Olson, Jr.  ([1965] 1971). ''The Logic of Collective Action: Public Goods and the Theory of Groups'', 2nd ed. Harvard University Press, [http://www.hup.harvard.edu/catalog.php?isbn=9780674537514 Description], [http://www.hup.harvard.edu/catalog.php?recid=24500&content=toc Table of Contents], and [https://archive.org/details/logicofcollectiv00olso_0/page/5 preview].</ref> The concept of bounded rationality complements "rationality as optimization", which views decision-making as a fully rational process of finding an optimal choice given the information available.<ref name="bounded_rationality_1999">{{cite book|last1=Gigerenzer|first1=Gerd|url=https://books.google.com/books?id=dVMq5UoYS3YC&q=%22bounded+rationality%22|title=Bounded Rationality: The Adaptive Toolbox|last2=Selten|first2=Reinhard|publisher=MIT Press|year=2002|isbn=978-0-262-57164-7}}</ref> Therefore, bounded rationality can be said to address the discrepancy between the assumed perfect rationality of human behaviour (which is utilised by other economics theories), and the reality of human [[Cognition|cognition]].<ref>{{Citation |last=Wheeler |first=Gregory |title=Bounded Rationality |date=2020 |url=https://plato.stanford.edu/archives/fall2020/entries/bounded-rationality/ |encyclopedia=The Stanford Encyclopedia of Philosophy |editor-last=Zalta |editor-first=Edward N. |edition=Fall 2020 |publisher=Metaphysics Research Lab, Stanford University |access-date=2022-05-03}}</ref>  In short, bounded rationality revises notions of "perfect" rationality to account for the fact that perfectly rational decisions are often not feasible in practice because of the intractability of natural decision problems and the finite computational resources available for making them. The concept of bounded rationality continues to influence (and be debated in) different disciplines, including political science, [[Finance:Economics|economics]], [[Social:Psychology|psychology]], [[Philosophy:Law|law]] and [[Cognitive science|cognitive science]].<ref>{{Cite journal|last1=Chater|first1=Nick|last2=Felin|first2=Teppo|last3=Funder|first3=David C.|last4=Gigerenzer|first4=Gerd|last5=Koenderink|first5=Jan J.|last6=Krueger|first6=Joachim I.|last7=Noble|first7=Denis|last8=Nordli|first8=Samuel A.|last9=Oaksford|first9=Mike|last10=Schwartz|first10=Barry|last11=Stanovich|first11=Keith E.|last12=Todd|first12=Peter M.|date=2018-04-01|title=Mind, rationality, and cognition: An interdisciplinary debate|journal=Psychonomic Bulletin & Review|language=en|volume=25|issue=2|pages=793–826|doi=10.3758/s13423-017-1333-5|issn=1531-5320|pmc=5902517|pmid=28744767}}</ref>

==Background and motivation==
{{em|Bounded rationality}} was coined by [[Biography:Herbert A. Simon|Herbert A. Simon]], where it was proposed as an alternative basis for the mathematical and neoclassical economic modelling of [[Decision-making|decision-making]], as used in [[Finance:Economics|economics]], political science, and related disciplines. Many [[Finance:Economics|economics]] models assume that agents are on average rational, and can in large quantities be approximated to act according to their [[Preference|preference]]s in order to maximise [[Utility|utility]].<ref name=":0" /> With bounded rationality, Simon's goal was "to replace the global rationality of [[Homo economicus|economic man]] with a kind of rational behavior that is compatible with the access to information and the computational capacities that are actually possessed by organisms, including man, in the kinds of environments in which such organisms exist."<ref>{{Cite journal|last=Simon|first=Herbert A.|date=1955-02-01|title=A Behavioral Model of Rational Choice|url=https://academic.oup.com/qje/article/69/1/99/1919737|journal=The Quarterly Journal of Economics|language=en|volume=69|issue=1|pages=99–118|doi=10.2307/1884852|issn=0033-5533|jstor=1884852}}</ref> Soon after the term bounded rationality appeared, studies in the topic area began examining the issue in depth. A study completed by Allais in 1953 began to generate ideas of the irrationality of decision making as he found that given preferences, individuals will not always choose the most rational decision and therefore the concept of rationality was not always reliable in economic predictions.<ref>Schiliró, D. (2013). Bounded Rationality: Psychology, Economics and the Financial Crises. Theoretical and Practical Research in Economic Fields, 4(1(7)), 97-108.</ref>

In ''Models of Man'', Simon argues that most people are only partly rational, and are irrational in the remaining part of their actions. In another work, he states "boundedly rational agents experience limits in formulating and solving complex problems and in processing (receiving, storing, retrieving, transmitting) [[Information|information]]".<ref>[[Biography:Oliver E. Williamson|Oliver E. Williamson]], p.&nbsp;553, citing Simon.</ref> Simon used the analogy of a pair of scissors, where one blade represents "cognitive limitations" of actual humans and the other the "structures of the environment", illustrating how minds compensate for limited resources by exploiting known structural regularity in the environment.<ref name="bounded_rationality_1999" />

Simon describes a number of dimensions along which "classical" models of rationality can be made somewhat more realistic, while remaining within the vein of fairly rigorous formalization. These include:

* limiting the types of [[Utility|utility]] functions
* recognizing the costs of gathering and processing information
* the possibility of having a "vector" or "multi-valued" utility function

Simon suggests that economic agents use [[Philosophy:Heuristics in judgment and decision-making|heuristics]] to make decisions rather than a strict rigid rule of optimization. They do this because of the complexity of the situation. An example of behaviour inhibited by heuristics can be seen when comparing the cognitive strategies utilised in simple situations (e.g tic-tac-toe), in comparison to strategies utilised in difficult situations (e.g chess). Both games, as defined by [[Game theory|game theory]] economics, are finite games with perfect information, and therefore equivalent.<ref name=":2">{{Citation|last=Bendor|first=John|title=Bounded Rationality|date=2015|url=http://dx.doi.org/10.1016/b978-0-08-097086-8.93012-5|encyclopedia=International Encyclopedia of the Social & Behavioral Sciences|pages=773–776|publisher=Elsevier|doi=10.1016/b978-0-08-097086-8.93012-5|isbn=978-0-08-097087-5|access-date=2020-11-01}}</ref> However, within chess, mental capacities and abilities are a binding constraint, therefore optimal choices are not a possibility.<ref name=":2" /> Thus, in order to test the mental limits of agents, complex problems, such as those within chess, should be studied to test how individuals work around their cognitive limits, and what behaviours or heuristics are used to form solutions<ref>{{Cite journal|last1=Rosenzweig|first1=M|last2=Porter|first2=L|date=1990|title=Invariants of Human Behaviour|journal=Annual Review of Psychology|volume=41|pages=1–19|doi=10.1146/annurev.ps.41.020190.000245|pmid=18331187|doi-access=free}}</ref>

Anchoring and adjustment are types of heuristics that give some explanation to bounded rationality and why decision makers do not make rational decisions. A study undertaken by Zenko et al. showed that the amount of physical activity completed by decision makers was able to be influenced by anchoring and adjustment as most decision makers would typically be considered irrational and would unlikely do the amount of physical activity instructed and it was shown that these decision makers use anchoring and adjustment to decide how much exercise they will complete <ref>Zenko, Z., Ekkekakis, P., & Kavetsos, G. (2016). Changing Minds: Bounded Rationality and Heuristic Processes in Exercise-Related Judgments and Choices. Sport, Exercise, and Performance Psychology, 5(4), 337-351. https://doi.org/10.1037/spy0000069</ref>

== Example of bounded rationality ==
{{OR section|date=August 2023}}
[[File:Oudewater waitress 2010-07-18.jpg|thumb|193x193px]]
A good example of bounded rationality in individuals would be a customer who made a suboptimal decision to order some food at the restaurant because they felt rushed by the waiter who was waiting beside the table. Another example is a trader who would make a moderate and risky decision to trade their stock due to time pressure and imperfect information of the market at that time.

In organisational context, a CEO cannot make fully rational decisions in an ad-hoc situation because their cognition was overwhelmed by a lot of information in that tense situation. The CEO also needs to take time to process all the information given to them, but due to the limited time and fast decision making needed, they will disregard some information in determining the decision.

==Model extensions==

As decision-makers have to make decisions about how and when to decide, [[Biography:Ariel Rubinstein|Ariel Rubinstein]] proposed to model bounded rationality by explicitly specifying decision-making procedures as decision-makers with the same information are also not able to analyse the situation equally thus reach the same “rational” decision.<ref name=":3">{{cite book |author=Rubinstein, Ariel |title=Modeling bounded rationality |publisher=MIT Press |year=1997 |url = http://arielrubinstein.tau.ac.il/book-br.html | isbn=9780262681001 }}</ref> Rubinstein argues that consistency in reaching final decision for the same level of information must factor in the decision making procedure itself.<ref name=":3" /> This puts the study of decision procedures on the research agenda.

Gerd Gigerenzer stated that decision theorists, to some extent, have not adhered to Simon's original ideas. Rather, they have considered how decisions may be crippled by limitations to rationality, or have modeled how people might cope with their inability to optimize. Gigerenzer proposes and shows that simple heuristics often lead to better decisions than theoretically optimal procedures.<ref name="Olson"/> Moreover, Gigerenzer claimed, agents react relative to their environment and use their cognitive processes to adapt accordingly.<ref name=":0" />

[[Biography:Huw Dixon|Huw Dixon]] later argued that it may not be necessary to analyze in detail the process of reasoning underlying bounded rationality.<ref>{{cite book |chapter=Some Thoughts on Artificial Intelligence and Economic Theory |editor-last=Moss |editor2-last=Rae |title=Artificial Intelligence and Economic Analysis |publisher=Edward Elgar |year=1992 |pages=[https://archive.org/details/artificialintell0000unse_a9c0/page/131 131–154] |isbn=978-1852786854 |chapter-url=https://archive.org/details/artificialintell0000unse_a9c0/page/131 }}</ref>  If we believe that agents will choose an action that gets them "close" to the optimum, then we can use the notion of ''epsilon-optimization'', which means we choose our actions so that the payoff is within epsilon of the optimum. If we define the optimum (best possible) payoff as <math> U^* </math>, then the set of epsilon-optimizing options '''S(ε)''' can be defined as all those options '''s''' such that:
<math display="block"> U(s) \geq U^* - \epsilon.</math>

The notion of strict rationality is then a special case (''ε''=0). The advantage of this approach is that it avoids having to specify in detail the process of reasoning, but rather simply assumes that whatever the process is, it is good enough to get near to the optimum.

From a computational point of view, decision procedures can be encoded in algorithms and heuristics. Edward Tsang argues that the effective rationality of an agent is determined by its [[Computational intelligence|computational intelligence]]. Everything else being equal, an agent that has better algorithms and heuristics could make "more rational" (closer to optimal) decisions than one that has poorer heuristics and algorithms.<ref>{{cite journal |doi=10.1007/s11633-008-0063-6 |author=Tsang, E.P.K. |title=Computational intelligence determines effective rationality |journal= International Journal of Automation and Computing|volume=5 |issue=1 |pages=63–6 |year=2008 |s2cid=9769519 }}</ref>

Tshilidzi Marwala and Evan Hurwitz in their study on bounded rationality observed that advances in technology (e.g. computer processing power because of [[Moore's law]], [[Artificial intelligence|artificial intelligence]], and big data analytics) expand the bounds that define the feasible rationality space. Because of this expansion of the bounds of rationality, machine automated decision making makes markets more efficient.<ref>{{cite book |last1=Marwala |first1= Tshilidzi| last2=Hurwitz |first2= Evan |title=Artificial Intelligence and Economic Theory: Skynet in the Market |year=2017 |publisher=[[Company:Springer Science+Business Media|Springer]] |location=London |isbn=978-3-319-66104-9}}</ref>

The model of bounded rationality also extends to bounded self-interest,<ref>{{Cite journal|last1=Gotsis|first1=George|last2=Kortezi|first2=Zoe|date=2011-01-01|title=Bounded self‐interest: a basis for constructive organizational politics|url=https://doi.org/10.1108/01409171111117889|journal=Management Research Review|volume=34|issue=4|pages=450–476|doi=10.1108/01409171111117889|issn=2040-8269}}</ref> in which humans are sometimes willing to forsake their own self-interests for the benefits of others due to incomplete information that the individuals have at the time being. This is something that had not been considered in earlier economic models.<ref>{{Cite journal |last=Kirchgässner |first=Gebhard |date=2005 |title=The Weak Rationality Principle in Economics |journal=Cesifo Working Paper Series |url=https://ideas.repec.org/p/ces/ceswps/_1410.html |language=en}}</ref>

The theory of rational inattention, an extension of bounded rationality, studied by Christopher Sims, found that decisions may be chosen with incomplete information as opposed to affording the cost to receive complete information. This shows that decision makers choose to endure bounded rationality.<ref>Sent, E. (2018). Rationality and Bounded Rationality: You can't have one without the Other. The European Journal of the History of Economic Thought, 25(6), 1370-1386. https://doi.org/10.1080/09672567.2018.1523206</ref>

On the other hand, another extension came from the notion of bounded rationality and was explained by Ulrich Hoffrage and Torsten Reimer in their studies of a “fast and frugal heuristic approach”. The studies explained that complete information sometimes is not needed as there are easier and simpler ways to reach the same “optimal” outcome.<ref name=":4">{{Cite journal |last1=Hoffrage |first1=Ulrich |last2=Reimer |first2=Torsten |date=2004-01-01 |title=Models of Bounded Rationality: The Approach of Fast and Frugal Heuristics |url=https://www.researchgate.net/publication/23779792 |journal=Management Revue. The International Review of Management Studies |volume=15 |issue=4 |pages=437–459 |doi=10.5771/0935-9915-2004-4-437|s2cid=153412733 |doi-access=free }}</ref> However, this approach which is usually known as the gaze heuristic was explained to be the theory for non-complex decision making only.<ref name=":4" />

==Behavioral economics==
{{further|Finance:Behavioral economics}}
Bounded rationality implies the idea that humans take reasoning shortcuts that may lead to sub-optimal decision-making. Behavioural economists engage in mapping the decision shortcuts that agents use in order to help increase the effectiveness of human decision-making. One treatment of this idea comes from Cass Sunstein and [[Biography:Richard Thaler|Richard Thaler]]'s ''Nudge''.<ref>{{cite book|title=Nudge: Improving Decisions about Health, Wealth, and Happiness|isbn=978-0-14-311526-7|oclc=791403664|date=April 8, 2008|publisher=Yale University Press|last1=Thaler|first1=Richard H.|last2=Sunstein|first2=Cass R.|title-link=Nudge (book)}}</ref><ref>{{cite journal|title=Choice Architecture|last1=Thaler|first1=Richard H.|last2=Sunstein|first2=Cass R.|last3=Balz|first3=John P.|journal=Behavioral & Experimental Economics eJournal |doi=10.2139/ssrn.1583509|ssrn=1583509|date=April 2, 2010|s2cid=219382170}}</ref> Sunstein and Thaler recommend that choice architectures are modified in light of human agents' bounded rationality. A widely cited proposal from Sunstein and Thaler urges that healthier food be placed at sight level in order to increase the likelihood that a person will opt for that choice instead of a less healthy option. Some critics of ''Nudge'' have argued that modifying choice architectures will lead to people becoming worse decision-makers.<ref>{{cite web|last1=Wright|first1=Joshua|first2=Douglas|last2=Ginsberg|title=Free to Err?: Behavioral Law and Economics and its Implications for Liberty|url=http://www.libertylawsite.org/liberty-forum/free-to-err-behavioral-law-and-economics-and-its-implications-for-liberty/|date=February 16, 2012|work=Library of Law & Liberty}}</ref><ref>{{cite book|last1=Sunstein|first1=Cass|title=Going to Extremes: How Like Minds Unite and Divide|url=https://books.google.com/books?id=jEWplxVkEEEC|isbn=9780199793143|date=2009-05-13|publisher=Oxford University Press }}</ref>

Furthermore, bounded rationality attempts to address assumption points discussed within [[Finance:Neoclassical economics|neoclassical economics]] theory during the 1950s. This theory assumes that the complex problem, the way in which the problem is presented, all alternative choices, and a utility function, are all provided to decision-makers in advance,<ref>{{cite book|title=Economics, Bounded Rationality and the Cognitive Revolution|isbn=978-1-85278-425-6|date=2008|publisher=Edward Elgar Publishing Limited|last1=Simon|first1=Herbert A.|last2=Egidi|first2=Massimo|last3=Viale|first3=Ricardo|last4=Marris|first4=Robin|url=https://books.google.com/books?id=CdI9VRcn1SEC&q=bounded+rationality+economics&pg=PP8
}}</ref> where this may not be realistic. This was widely used and accepted for a number of decades, however economists realised some disadvantages exist in utilising this theory. This theory did not consider how problems are initially discovered by decision-makers, which could have an impact on the overall decision. Additionally, personal values, the way in which alternatives are discovered and created, and the environment surrounding the decision-making process are also not considered when using this theory.<ref>{{cite book|title=Economics, Bounded Rationality and the Cognitive Revolution|isbn=978-1-85278-425-6|date=2008|publisher=Edward Elgar Publishing Limited|last1=Simon|first1=Herbert A.|last2=Egidi|first2=Massimo|last3=Viale|first3=Ricardo|last4=Marris|first4=Robin|url=https://books.google.com/books?id=CdI9VRcn1SEC&q=bounded+rationality+economics&pg=PP8}}</ref> Alternatively, bounded rationality focuses on the cognitive ability of the decision-maker and the factors which may inhibit optimal decision-making<ref>{{cite journal |last1=Selten |first1=R |title=Bounded Rationality |journal=Journal of Institutional and Theoretical Economics (JITE) / Zeitschrift für die Gesamte Staatswissenschaft |date=1990 |volume=146 |issue=4 |pages=649–658 |jstor=40751353}}</ref> Additionally, placing a focus on organisations rather than focusing on markets as neoclassical economics theory does, bounded rationality is also the basis for many other economics theories (e.g. organisational theory) as it emphasises that the "...performance and success of an organisation is governed primarily by the psychological limitations of its members..." as stated by John D.W. Morecroft (1981).<ref>{{cite book |title=System Dynamics: Portraying Bounded Rationality |publisher=Alfred P. Sloan School of Management |last=Morecroft |first=John. D. W. |id=WP1332- 82A |date=October 14, 1981 |hdl=1721.1/49181 |hdl-access=free}}</ref>

== In psychology ==
The collaborative works of [[Biography:Daniel Kahneman|Daniel Kahneman]] and Amos Tversky expand upon Herbert A. Simon's ideas in the attempt to create a map of bounded rationality. The research attempted to explore the choices made by what was assumed as rational agents compared to the choices made by individuals optimal beliefs and their [[Philosophy:Satisficing|satisficing]] behaviour.<ref name=":1">{{Cite journal|last=Kahneman|first=Daniel|date=2003|title=Maps of Bounded Rationality: Psychology for Behavioral Economics|url=https://www.jstor.org/stable/3132137|journal=The American Economic Review|volume=93|issue=5|pages=1449–1475|doi=10.1257/000282803322655392|jstor=3132137|s2cid=15131441 |issn=0002-8282}}</ref> Kahneman cites that the research contributes mainly to the school of psychology due to imprecision of psychological research to fit the formal economic models, however, the theories are useful to economic theory as a way to expand simple and precise models and cover diverse psychological phenomena.<ref name=":1" /> Three major topics covered by the works of [[Biography:Daniel Kahneman|Daniel Kahneman]] and Amos Tversky include heuristics of judgement, risky choice, and [[Philosophy:Framing effect (psychology)|framing effect]], which were a culmination of research that fit under what was defined by Herbert A. Simon as the Psychology of Bounded Rationality.<ref>{{Cite journal|last=Kahneman|first=Daniel|date=2003|title=A perspective on judgment and choice: Mapping bounded rationality.|url=http://dx.doi.org/10.1037/0003-066x.58.9.697|journal=American Psychologist|volume=58|issue=9|pages=697–720|doi=10.1037/0003-066x.58.9.697|pmid=14584987|s2cid=16994141 |issn=1935-990X}}</ref> In contrast to the work of Simon; Kahneman and Tversky aimed to focus on the effects bounded rationality had on simple tasks which therefore placed more emphasis on errors in cognitive mechanisms irrespective of the situation.<ref name=":2" /> The study undertaken by Kahneman found that emotions and the psychology of economic decisions play a larger role in the economics field than originally thought. The study focused on the emotions behind decision making such as fear and personal likes and dislikes and found these to be significant factors in economic decision making.<ref>Kahneman, D. (2003). Maps of Bounded Rationality: Psychology for Behavioural Economics. The American Economic Review, 93(5), 1449-1475. https://doi.org/10.1257/000282803322655392</ref>

Bounded rationality is also shown to be useful in negotiation techniques as shown in research undertaken by Dehai et al. that negotiations done using bounded rationality techniques by labourers and companies when negotiating a higher wage for workers were able to find an equal solution for both parties.<ref>Dehai, L., Wei, L., Hongyi, L., & Jiafu, T. (2017). Bargaining Model of Labour Disputes Considering Social Mediation and Bounded Rationality. European journal of Operational Research, 262(3), 1064-1071. https://doi.org/10.1016/j.ejor.2017.04.003</ref>

==Influence on social network structure==

Recent research has shown that bounded rationality of individuals may influence the [[Network topology|topology of the social networks]] that evolve among them. In particular, Kasthurirathna and Piraveenan<ref>{{Cite journal|last1=Kasthurirathna|first1=Dharshana|last2=Piraveenan|first2=Mahendra|date=2015-06-11|title=Emergence of scale-free characteristics in socio-ecological systems with bounded rationality|journal=Scientific Reports|language=en|volume=5|issue=1|page=10448|doi=10.1038/srep10448|pmid=26065713|pmc=4464151|bibcode=2015NatSR...510448K|issn=2045-2322|doi-access=free}}</ref> have shown that in socio-ecological systems, the drive towards improved rationality on average might be an evolutionary reason for the emergence of scale-free properties. They did this by simulating a number of strategic games on an initially random network with distributed bounded rationality, then re-wiring the network so that the network on average converged towards Nash equilibria, despite the bounded rationality of nodes. They observed that this re-wiring process results in [[Scale-free network|scale-free networks]]. Since scale-free networks are ubiquitous in social systems, the link between bounded rationality distributions and social structure is an important one in explaining social phenomena.

==See also==
{{Columns-list|colwidth=20em|
* ''[[Social:Administrative Behavior|Administrative Behavior]]''
* [[Philosophy:Altruism|Altruism]]
* [[Analysis paralysis]]
* ''Ars longa, vita brevis''
* Carnegie School
* Concept driven strategy
* [[Philosophy:Cognitive bias|Cognitive bias]]
* [[Cognitive miser]]
* [[Finance:Ecological rationality|Ecological rationality]]
* [[Philosophy:Elitism|Elitism]]
* [[Framing (social sciences)]]
* ''[[Homo economicus]]''
* [[Philosophy:Memetics|Memetics]]
* [[Finance:Neoclassical economics|Neoclassical economics]]
* [[Philosophy:Organizing principle|Organizing principle]]
* [[Philosophy:Parametric determinism|Parametric determinism]]
* {{section link|Potential game|Bounded rational models}}
* [[Priority heuristic]]
* [[Philosophy:Prospect theory|Prospect theory]]
* [[Social:Psychohistory|Psychohistory]]
* [[Rational ignorance]]
* [[Biography:Reinhard Selten|Reinhard Selten]]
* Roman Dual mentality on trade
* [[Philosophy:Satisficing|Satisficing]]
* Social heuristics
* [[Finance:Subjective theory of value|Subjective theory of value]]
* Substitution bias (psychology)
* [[Tragedy of the commons]]
* [[Finance:Transaction cost|Transaction cost]]
* [[Utility maximization problem]]
}}

==References==
{{reflist}}

==Further reading==
* Bayer, R. C., Renner, E., & Sausgruber, R. (2009). ''[http://www.econstor.eu/handle/10419/73510 Confusion and reinforcement learning in experimental public goods games].'' NRN working papers 2009–22, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
* {{cite book |author=Elster, Jon |title=Sour Grapes: Studies in the Subversion of Rationality |publisher=Cambridge University Press |location=Cambridge, UK |year=1983 |isbn=978-0-521-25230-0 }}
* Felin, T., Koenderink, J., & Krueger, J. (2017). "Rationality, perception and the all-seeing eye." ''Psychonomic Bulletin and Review'', 25: 1040-1059. [https://link.springer.com/article/10.3758/s13423-016-1198-z DOI 10.3758/s13423-016-1198-z]
* Gershman, S.J., Horvitz, E.J., & Tenenbaum, J.B. (2015). Computational rationality: A converging paradigm for intelligence in brains, minds, and machines. ''Science,'' 49: 273-278. [https://www.science.org/doi/abs/10.1126/science.aac6076 DOI: 10.1126/science.aac6076]
* {{cite book |author1=Gigerenzer, Gerd  |author2=Selten, Reinhard  |name-list-style=amp |title=Bounded Rationality |publisher=MIT Press |location=Cambridge |year=2002 |isbn=978-0-262-57164-7 }}
* Hayek, F.A (1948) Individualism and Economic order
* {{cite journal |doi=10.1257/000282803322655392 |author=Kahneman, Daniel |title=Maps of bounded rationality: psychology for behavioral economics |journal=The American Economic Review |volume=93 |issue=5 |pages=1449–75 |year=2003 |url=http://www.econ.tuwien.ac.at/Lotto/papers/Kahneman2.pdf |citeseerx=10.1.1.194.6554 |s2cid=15131441 |access-date=2017-11-01 |archive-url=https://web.archive.org/web/20180219074537/http://www.econ.tuwien.ac.at/lotto/papers/Kahneman2.pdf |archive-date=2018-02-19 |url-status=dead }}
* {{cite book |author=March, James G. |title=A Primer on Decision Making: How Decisions Happen |publisher=The Free Press |location=New York |year=1994 |isbn=978-0-02-920035-3 |url-access=registration |url=https://archive.org/details/primerondecision00marc }}
* Simon, Herbert (1957). "A Behavioral Model of Rational Choice", in Models of Man, Social and Rational: Mathematical Essays on Rational Human Behavior in a Social Setting. New York: Wiley.
* {{cite book |author1=March, James G.  |author2=Simon, Herbert  |name-list-style=amp | title=Organizations  |publisher=John Wiley and Sons |year=1958 |isbn=978-0-471-56793-6 }}
* {{cite journal |doi=10.1126/science.2270480 |author=Simon, Herbert |title=A mechanism for social selection and successful altruism |journal=Science |volume=250 |issue=4988 |pages=1665–8 |year=1990 |pmid=2270480 |bibcode=1990Sci...250.1665S }}
* {{cite journal |doi=10.1287/orsc.2.1.125 |author=Simon, Herbert |title=Bounded Rationality and Organizational Learning |journal=Organization Science |volume=2 |issue=1 |pages=125–134 |year=1991 }}
* {{cite book |author=Tisdell, Clem |title=Bounded Rationality and Economic Evolution: A Contribution to Decision Making, Economics, and Management |publisher=Brookfield |location=Cheltenham, UK |year=1996 |isbn=978-1-85898-352-3 }}
* {{cite encyclopedia |last1=Wheeler |first1=Gregory | editor= Edward Zalta |encyclopedia=[[Stanford Encyclopedia of Philosophy]] | title=Bounded Rationality |url=https://plato.stanford.edu/entries/bounded-rationality |year=2018 |location= Stanford, CA}}
* {{cite journal |author=Williamson, Oliver E.|title=The economics of organization: the transaction cost approach |journal=American Journal of Sociology |volume=87 |issue=3 |pages=[http://www.polisci.ucsd.edu/gcox/06%20Ollie.pdf 548–577] (press '''+''')|year=1981 |doi=10.1086/227496 |s2cid=154070008 }}

==External links==
* [https://plato.stanford.edu/entries/bounded-rationality/ Bounded Rationality] in [[Stanford Encyclopedia of Philosophy]]
* [http://choo.fis.utoronto.ca/FIS/courses/lis2149/kahneman.NobelPrize.pdf Mapping Bounded Rationality by Daniel Kahneman]
* [http://www.huwdixon.org/SurfingEconomics/chapter7.pdf Artificial Intelligence and Economic Theory] chapter 7 of [http://huwdixon.org/SurfingEconomics/index.html Surfing Economics] by [[Biography:Huw Dixon|Huw Dixon]].
* {{cite IEP |url-id=re-bo-ag |title=Resource Bounded Agents}}

{{game theory}}

[[Category:Behavioral economics]]
[[Category:Game theory]]
[[Category:Rational choice theory]]
[[Category:Cognitive biases]]

{{Sourceattribution|Bounded rationality}}