Bounded Rationality—Knowing Your Limits
Lecture no. 11 from the course: Behavioral Economics: When Psychology and Economics Collide
Taught by Professor Scott Huettel | 30 min | Categories: The Great Courses Plus Online Economics & Finance Courses
The concept of “bounded rationality” describes human behavior regarding complex decisions. Using the example of purchasing a car, observe how our brains naturally narrow options and judge alternatives, creating simple rules to make complexity manageable. Learn also about “unconscious decision making” and surprising data suggesting that active deliberation can often impede good decisions.