A human cannot consider all the problems they face and all the potential solutions at the same time. Consequently, attention is focused on a tiny proportion of the issues, those which have the most pressing impact in terms of risk or reward. These are the ones that make their way to the top of the agenda.
Bounded rationality is the idea that rationality is limited, when individuals make decisions, these are based on several key criteria
- The impact of the problem at hand
- The risk faced in doing nothing
- The manageability of the risk – personally and socially
- The difficulty of actually making a decision,
- The current experience of the individual who is making the decision
- The cognitive limitations of the individuals thought process,
- The time available to make the decision.
Satisfactory or perfect?
In most instances the decision-makers acts as “placater”, seeking a satisfactory solution rather than the best or optimal one.