What is bounded rationality? How is it related to decision making?
The capacity of the human mind for formulating and solving complex problems is far too small to meet the requirements for full rationality. Thus, individuals operate within the confines of bounded rationality.
They construct simplified models that extract the essential features from problems without capturing all their complexity. Individuals can then behave rationally within the limits of the simple model. Once the limited set of alternatives is identified, the decision maker will begin reviewing it. But the review will not be comprehensive.
Instead, the decision maker will begin with alternatives that differ only in a relatively small degree from the choice currently in effect. Following along familiar and well-worn paths, the decision maker proceeds to review alternatives only until he or she identifies an alternative that is good enough. The first alternative that meets the "good enough" criterion ends the search. Thus, the final solution represents a satisficing choice rather than an optimum one.