Bounded Rationality

Bounded rationality is a concept in decision-making theory that acknowledges the cognitive limitations of individuals when making rational choices. It posits that people have limited information, time, and mental capacity, leading them to make satisfactory decisions rather than optimal ones. This framework is widely applied in economics, psychology, and artificial intelligence to model realistic human behavior.

Also known as: Limited Rationality, Satisficing, Cognitive Bounds, BR, Bounded Rationality Theory

Why learn Bounded Rationality?

Developers should learn bounded rationality to design systems that account for human limitations, such as in user interfaces, AI agents, or economic simulations. It helps in creating more intuitive and efficient software by anticipating how users might make decisions under constraints, rather than assuming perfect rationality.

Learning Resources

• docs: Bounded Rationality - Stanford Encyclopedia of Philosophy
• book: Bounded Rationality: The Adaptive Toolbox
• course: Introduction to Bounded Rationality - Coursera
• video: Bounded Rationality Explained - YouTube
• tutorial: Bounded Rationality in AI - Towards Data Science