Bounded rationality
What Bounded rationality means in Economics A-Level, as defined for AQA.
Definitions of Bounded rationality
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Reference: AQA
Decision-making limited by available information, cognitive ability, and time constraints, so consumers' ability to make utility-maximising decisions is limited.
A practical constraint meaning firms lack the perfect information required to calculate the exact profit-maximising output in complex, dynamic markets.
Topics that use Bounded rationality
- Aspects of behavioural economic theory (AQA A-Level)
- The objectives of firms (AQA A-Level)
Related terms
- Anchoring
- Availability bias
- Behavioural economics
- Bounded self-control
- Business objectives
- Consumer behaviour
- Corporate governance
- Corporate social responsibility
Using Bounded rationality in the exam
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