Bounded rationality describes decision-makers as limited by what?

• A. Information, cognitive limits, and time; leading to satisficing.
• B. Unlimited data and infinite time to optimize.
• C. Decision making is purely random.
• D. Only emotions drive decisions.

Answer: (A)

Bounded rationality says people make decisions under constraints: limited information, limited cognitive processing power, and finite time. Because of these limits, they don’t optimize by evaluating every possible option; instead they search for a solution that’s good enough—satisficing. This captures why managers often settle for a satisfactory option rather than the optimal one when data is incomplete, mental effort is constrained, or deadlines loom. For example, choosing a supplier under uncertain data and a tight schedule might involve selecting the first option that meets basic price and quality criteria rather than weighing every alternative. The other statements ignore these real-world constraints or oversimplify decision making by suggesting unlimited data, randomness, or emotion alone.