Hello,

Can any one explain to me what is meant by "bounded rationality".

My guess is a practical decision subjected to a certain notion or rule.

Within the social sciences in general, and econmics in particular, several of the models used to describe and predict behaviour (of individuals or groups) assume that decisions are based upon rational decisions. i.e. Alternative actions are weighed against each other as to their outcome and cost and the best course of action is selected.
All these models, to a greater or lesser extent, make various assumptions as to the completeness and accuracy of the information upon which decisions will be based.
There are two objections to such models: information is often limited; more significantly, human decisions are not always rational.
In other words, rational behaviour is not total, is not an absolute. It has limits. It is bounded. Hence "bounded rationality".

Hi,

Great. Thank u 4 ur explanation. Can u please continue with it.

Hi,

Has this got some connection with satisficory profits. So is bounded rationality a constraint to profit maximisation.