Bounded Rationality Characteristics

Bounded Rationality Characteristics

Bounded rationality concept can be explained in term of human rational decision, limited knowledge & information, and ideal decision making is not possible.

1.    Human act rationally

Human act rationally. It means human makes rational decision as per their understanding.

2.    Limited Knowledge

Human have limited knowledge for decision making or limited skill for decision making. It means that human cannot take into account all related factor, while making decisions. They make decision according to their capacity.

3.    Ideal decision not possible

Bounded rationality recognizes the fact that ideal decisions are not possible due to many factors. Human being cannot predict future exactly. it is also difficult to predict the reaction of market.