[[Deciding]] tags:: #on/decisions | #on/change | #on/projectmanagement dates:: 2022-02-17 people:: _Humans are rational within the limits of their experience, opportunity and imagination.* **What is the big idea?** Humans are not rational creatures, our decisions appear to be more of [[satisficers]] than optimizers. We are limited by the time allowed to make the decision, the models we use to characterize the data, the biases we apply to the data, than the optimal solution. > **Bounded Rationality** is the idea that rationality is limited when individuals make decisions. In other words, humans' "preferences are determined by changes in outcomes relative to a certain reference level". 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, rather than an optimal solution. Therefore, humans do not undertake a full cost-benefit analysis to determine the optimal decision, but rather, choose an option that fulfils their adequacy criteria.Some models of human behavior in the social sciences assume that humans can be reasonably approximated or described as "rational" entities, as in rational choice theory or Downs' political agency model. 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. 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 such as the Neoclassical approach), and the reality of human cognition. 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 economics, psychology, law, political science, and cognitive science. > > [Wikipedia](https://en.wikipedia.org/wiki/Bounded%20rationality) **What does this remind me of?** [[Thinking Fast and Slow]], we are not [[Homo economicus]], instead we have limits to our rationality. We are bounded by the time we have for **When have I come across this lately?** [[Dopamine Nation]] [[Deciding]] **When do I want to stumble across this?** Hashtags: #on/decisions | #note/idea **Sources:** [[The Great Mental Models Volume 1]]