ECONOMICS

Detailed explanation-1: -Bounded rationality occurs when we make decisions based on limited information. It may lead to suboptimal decisions as it only considers some available options. The bounded rationality model is a way of thinking about decision-making that considers the limits of our rationality.

Detailed explanation-2: -The limitations that humans face which prevent fully rational decision making are: 1) information that is often incomplete, imperfect or unreliable, 2) a limited cognitive ability to retain and process relevant information, and 3) a limited amount of time in which to make any decision.

Detailed explanation-3: -What is Bounded Rationality? Bounded rationality is a human decision-making process in which we attempt to satisfice, rather than optimize. In other words, we seek a decision that will be good enough, rather than the best possible decision.

Detailed explanation-4: -Individuals are limited by the information they have in order to make a decision in the decision-making process due to the limitation of the rationality of individuals. Bounded rationality is the idea that when individuals make decisions, their rationality is limited by the available information.

Detailed explanation-5: -He had to make a hasty decision to choose the coffee. He did not know different types of coffee because he had to get to work fast. So the most logical thing a person could do is to choose whatever was on the menu. This was not a rational decision but one that was bound by constraints.