Bounded rationality is assumed in
A) the rational model.
B) the behavioral model.
C) decision making under certainty.
D) escalation of commitment.
E) the nonlinear model.

Question

Quizplus · Accepted Answer

Bounded rationality is a central concept in the behavioral approach to decision making, which assumes that humans have cognitive limitations which prevent them from making fully rational decisions. The rational model, on the other hand, assumes that decision makers are fully rational and have access to all necessary information. Decision making under certainty assumes that all outcomes and their probabilities are known with certainty, while bounded rationality implies that decision makers have limited information and cannot consider all possible options. Escalation of commitment is a phenomenon where decision makers continue to invest resources in a failing course of action despite mounting evidence of its failure, which is not directly related to bounded rationality. The nonlinear model is a general term for models that do not follow linear relationships, and is not directly relevant to the concept of bounded rationality.

Bounded Rationality Is Assumed in