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 ?
Assuming its hyperrationality as given, BE does not seek to investigate the psychology of this subject; instead continuing to assert that '[t]here is basically only one way to be rational' (Laibson 2002: 22).
poem combats hyperrationality by implying that a lack of comprehension
Hopkins's fluctuation between scientific precision and artistic description reflected his belief in the rationality of hyper-observation through the keen eye and the rejection of the notion of "hyperrationality," understanding it as the "hazardous thing." Keeping with this notion, in "Revaluing Nature: Toward an Ecological Criticism," Glen A.
I begin the analysis with some highly unrealistic assumptions about the hyperrationality of savers and then relax them after the mechanics of the model are clear.
Several scholars have tracked the intellectual traditions affecting the presidency (e.g., Berkowitz 1999) or the changing nature of political ideologies (e.g., Gerring 1998), while others (e.g., Jamieson 1988) have lionized logical coherence and hyperrationality in politics.
In the view of the three thinkers under discussion, human beings are not repositories of hyperrationality. They are error prone, often short-sighted, and frequently in need of guidance by the knowledge of others.
First, as I have been at some pain to emphasize, one should avoid the postulate of hyperrationality. Collective action, iterated games, and credibility are simple ideas that can be and have been refined to yield rococo (or baroque?) constructions that no longer bear any relation to observable behavior.
The ostensible hyperrationality of bond traders, for instance, relies on a set of cognitive biases to edit continuous information flows from electronic, print, and interpersonal sources (pp.
Rejecting the hyperrationality assumption of individuals preferred by many economists, Williamson draws on the work of March and Simon (1958) in adopting a bounded rationality view of human decision-making processes.
Indeed, it was the scientific hyperrationality of someone like Szilard that Roald Hoffman had in mind when he wrote "Why Scientists Shouldn't Run the World" (Issues, Winter 1990-91).
Sass explores the hyperrationality of modern philosophical and artistic self-reflexiveness in its affinities with schizophrenia (disavowing any attempt at influence or causality).