Bounded Rationality

The idea that the choices people make are determined not only by some consistent overall goal and the properties of the external world, but also by the knowledge that decision makers do and don’t have of their world, their ability of inability to evoke that knowledge when it is relevant, to work out the consequences of their actions, to conjure up possible courses of action, to cope with uncertainty, and to adjudicate among their many competing wants. Rationality is bounded because these abilities are severely limited. See also emotional reasoning and contrast the decision-making styles of maximizing and satisficing.

The idea that people’s choices are limited by not just external factors (e.g., how complex an issue is), but also by internal factors such as their knowledge, ability, and time availability. As such, eventual decisions and choices are imperfect (in essence, bounded) because of these constraints. Given these limitations, people tend to ‘satisfice’ – choose what is good enough, instead of the best possible choice.

Reference:

Simon, H. A. (2000). Bounded rationality in social science: Today and tomorrow. Mind & Society, 1(1), 25-39. https://doi.org/10.1007/BF02512227