Principles of Bounded Rationality

Soundness might be characterized as a capacity and readiness to take after a contemplated, apathetic and intelligent approach in seeing the targets d in assessing the methods through which goals are to be accomplished.

In an impartially levelheaded setting, the leader has an unmistakable thought of the issue, openings, and options supported by entire learning about them. In reality, it is extremely hard to settle on choices in a totally balanced way.

Reasonability is a perfect idea as sound choices are flawless and with no blame. In any case, all things considered, circumstances, a few handy contemplations are probably going to meddle with the achievement of a perfect condition. Truth be told, judiciousness demonstrates how the choices ought to be settled on and not how choices are really made.

  1. As no one can make a decision affecting the past, decisions must operate for the future and the future almost in all cases involves uncertainties.
  2. The capacity of the human mind to perceive, retain and retrieve complete knowledge and information on past, present and future events is not unlimited. Again, information is neither readily available nor is it a free commodity. The cost of information collection vis-a-vis its reliability and relevance is an important consideration.
  3. It is difficult to recognize all the alternatives that might be followed to reach a goal, because of human cognitive constraints. It is neither necessary nor feasible to generate the entire set of alternatives.The computational capabilities of the decision maker are also limited. In most cases, not all alternatives can be analyzed, even with latest analytical techniques and tools like computers.
  4. With all his’ knowledge and intelligence, the average decision maker has his own soft emotions. He cannot completely shut off his subjective viewpoints from influencing the decision process.

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