Bounded Rationality Model of Decision Making
Rational Thinking (or thinking of Rational Man)
Rational man is best decision maker and consistent. However s/he rly on some assumptions.
Bounded Rationality
Rationality of man is bounded by certain limitations.Â
Given by Herbert Simon.
Real situations people take decisions on the basis of heuristics rather than rule based optimization methods. He argued that decision-making is bounded by the following limitations.
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Information
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Intellectual Ability/Cognitive Ability
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Lack of Time to take Decisions
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