Bounded Rationality  

Definition of Bounded Rationality

This is the theory that there is only so much information that humans can be aware of. Therefore,when making decisions they base them on a limited choice. They are rational given limited choice and awareness of alternatives but they rarely maximise total utility because people don't want to take time to fully consider all options.

Bounded rationality places a check on economic theory which assumes firms and consumers are rational.

The advent of technology like the internet and computers have helped give consumers more informed choice.

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