People have limited cognitive resources and limited time to perform optimally on challenging decision and judgment tasks, such as estimating probabilities. In this regard, Simon (1990) described people as displaying:
A) limited capacity processing.
B) biased processing.
C) bounded rationality.
D) Type 2 thinking.

Question

Quizplus · Accepted Answer

Simon's notion of bounded rationality refers to the idea that people's decision-making abilities are constrained by their cognitive limitations, resulting in less than optimal decision-making processes. This concept suggests that individuals will make decisions that are satisfactory (good enough) rather than optimal, due to their limited time, attention, and cognitive resources. The other options (limited capacity processing, biased processing, and Type 2 thinking) all reflect specific aspects of bounded rationality, but none of them capture the broader concept.

People Have Limited Cognitive Resources and Limited Time to Perform