bounded rationality


bounded rationality
The type of rationality that most people (or organizations) resort to when faced with complex decisions in fast-moving, real-life situations where perfect information is unavailable. Given these constraints, decision makers will be content to find an alternative that gives satisfactory profits rather than one that maximizes profits. The concept of bounded rationality is thus a corrective to the assumption of many economic theories that economic agents make ideally rational decisions to optimize their self-interest.

Accounting dictionary. 2014.

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