Bounded Rationality in Organizations

Bounded rationality in organizations refers to the idea that decision-makers have limited time, information, and cognitive resources, which constrain their ability to find the optimal solution. Instead of identifying the perfect choice, they often settle for a satisficing option—one that is good enough given their constraints. This concept acknowledges real-world limitations and helps explain why organizations sometimes make decisions that are practical rather than perfectly optimal, balancing effort and resources effectively.