bounded rationality

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Bounded Rationality

The theory that humans attempt to make rational decisions, but their ability to do so is limited by knowledge, ability to know, inadequate time to consider and other factors. Bounded rationality may explain situations like panic buying, in which investors continue to buy a security long after it ceases to be rational to do so. Investors may believe the price for the security may continue to rise and may not believe they have enough time to find out for certain. Bounded rationality claims people aim for rationality but cannot be reasonable all the time. See also: Behavioral economics.

bounded rationality

limits on the capabilities of people to deal with complexity, process information and pursue rational aims. Bounded rationality prevents parties to a CONTRACT from contemplating or enumerating every contingency that might arise during a TRANSACTION, so preventing them from writing complete contracts.
References in periodicals archive ?
As Blaug (1992) demonstrates, anomalies arising from such evidence were initially rejected as random micro-level perturbations, though the mainstream has increasingly sought to theorise such deviations from the predictions of hyper-rational behaviour and the pertinence of socioeconomic institutions in shaping this behaviour and aggregate outcomes, as examined below (Wolff and Resnick 2012).
The author tells a first-person story of his own transformation from someone who, thanks to his own powerful Judge and Hyper-Rational saboteurs, was ruining his own prospects for success.
Max Weber's well known thesis about rationalization processes is turned upside down: Western corporations promote rather traditional values, countered by Chinese managers with hyper-rational attitudes.
MIT Press (Cambridge, MA) has published "Heuristics and the Law," a clothbound book that accepts that neither lawbreakers nor law officers behave as the "hyper-rational beings postulated by rational choice," MIT said, and that our environment is fundamentally uncertain and characterized by an unmanageable degree of complexity.
A selective reading of sources also leads to problems in chapter six, where Weitzman expresses a hyper-rational attitude toward magical practice that is unlikely to reflect the more matter-of-fact approach that most ancients would have taken toward such ritual technologies.
It's so wonderful to see these hyper-rational people go spiraling off into what sounds exactly like mysticism.
While this model has facilitated educators' attempts to address the logistical and efficiency issues associated with the mandate of educating the masses (a diverse group indeed), it often falls short of facilitating the work done by teachers in classrooms by perpetuating a hyper-rational view of teaching.
Arrow goes on to cite two well-documented heuristics that, as alternatives to the hyper-rational expectations hypothesis, go a long way toward explaining the existence of occasional asset-pricing bubbles.
But because the strongest case for liberalism does not rest on the assumption that people are hyper-rational, discovering and cataloging the many ways that individuals deviate from hyper-rationality does surprisingly little damage to liberalism's rationale.
In this sense, this book represents a different course of action, agents are not assumed to be hyper-rational, but on the other hand they are not devoid of rationality: they adapt.
The film's poetry--because it remains deeply poetic, through its faults--lies in the realization by the hyper-rational Alice that not all aspects of life can be easily, factually explained.
Very well, such a hyper-rational agent cannot obey the desire-as-belief thesis.