Bounded rationality limits our ability to make optimal choices from "summary" of Misbehaving by Richard H Thaler
Bounded rationality is a fundamental concept that shapes our decision-making process. It refers to the idea that our cognitive capabilities are limited, preventing us from making perfectly rational choices. This limitation arises from various factors such as time constraints, cognitive biases, and information overload. As a result, we often rely on heuristics or mental shortcuts to simplify complex decisions. While these shortcuts can be helpful in saving time and effort, they may also lead us astray from making optimal choices. When faced with a decision, we tend to focus on a few key factors and ignore others, a phenomenon known as focusing illusion. This can distort our perception of the problem at hand and...
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