Bounded Rationality
People make decisions with limited time, information, and cognitive capacity.
The Mechanism: Herbert Simon's bounded rationality describes decision-making under limits of information, time, and cognitive capacity. Rather than calculate every possible outcome, people often search until they find an option that meets an acceptable threshold.
The Philosophical Pivot: Rational choice depends on what a person can know and process, not only on what an ideal observer could calculate. A practical decision may be reasonable even when it is not globally optimal.
The Horizon: The framework informs behavioral economics, organizational theory, and interface design. It encourages systems to reduce unnecessary cognitive burden and make important consequences easier to understand.
Limits vary across people and contexts. Simplification can help, but it can also hide tradeoffs or manipulate choices through defaults.
Decision-makers can improve judgment by setting clear criteria, slowing down high-stakes choices, and noticing when a search has become unproductive.
The goal may be less about perfect calculation and more about creating conditions in which ordinary reasoning can succeed.
A choice can be rational for the mind that made it, even when it is not mathematically perfect.
Which decisions do I call irrational when the people making them may lack the time or information I take for granted?