Bounded Rationality and Emotions

The rational decision maker with limitless capacities to process information does not exist. People's cognitive and emotional resources are bounded (limited), thereby motivating them to engage in strategies to maximize effective use of these resources. It has been increasingly recognized that deliberation and intuition are two resources essential for adequate decision making. This entry discusses not only rationality and emotions but also the role they play in decision making and the strategies people use to approach decision problems.

Bounded Rationality

In 1957, Herbert Simon proposed the notion of bounded rationality to account for the fact that perfectly rational decisions are often not feasible in practice due to the finite information-processing capacities of humans. Simon points out that most people are only partly rational and are in fact ...

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