bounded rationality

decision making in which the processes used are rational within the constraints imposed by (a) limitations in the individual’s knowledge; (b) human cognitive limitations generally; and (c) empirical factors arising from the complex, real-life situations in which decisions have to be made. The concept was introduced by Herbert A. Simon as a corrective to the assumption of classical economic theory that individuals can and will make ideally informed and rational decisions in pursuit of their own self-interest (see rational-economic man). See procedural rationality; substantive rationality. See also satisfice.

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Psychology term of the day

February 17th 2025

transdermal patch

an adhesive application that is designed to release a drug at a steady rate via absorption through the skin into the bloodstream. Transdermal patches are used, for example, to administer nicotine in progressively smaller doses to people who are trying to give up smoking.