The Basic Idea
As hard as it is to believe, the average person makes about 35, 000 decisions everyday. Surely, not every one of these decisions takes intense thought and deliberation—if they did, we’d never get anything done! For most decisions, we are bound by the resources and information we have available to us at a given time.
Instead of scouring every possible option you could have for lunch if you consulted all the restaurants and grocery stores in your city, you simply open your fridge and see what is available. You may outsource some decisions by going to a nearby cafe or looking up a restaurant online, but generally, you work within a certain framework of options that is set by your own mind, and influenced by the cognitive and informational resources you have at your fingertips. In other words, you operate from a standpoint of bounded rationality, using a limited set of information and resources to make your daily decisions.
Broadly stated, the task is to replace the global rationality of economic man with a kind of rational behavior that is compatible with the access to information and the computational capacities that are actually possessed by organisms, including man, in the kinds of environments in which such organisms exist.
– Herbert Simon
