Theories of bounded rationality

Theories of bounded rationality suggest that people make decisions based on limited information, time, and mental resources, rather than perfectly rational analysis. Instead of searching for the best possible choice, individuals often settle for a good enough option that meets their key needs. This approach recognizes that human decision-making is constrained by cognitive limitations and practical constraints, leading to satisficing—selecting a solution that is satisfactory rather than optimal. These theories help explain real-world behavior, acknowledging that our reasoning is shaped by constraints and biases, rather than ideal rationality.