Bounded Rationality

While taking economics, I was perplexed by the "assumption" that people make "rational" decisions. This idea seemed rather idealistic. How often on a daily basis does it seem that people make rational actions? Seeing so many frivolous items on the shelf or poorly thought through inventions, I often asked myself, "Did they think about that before they made it?" And it went the other way too; it was easy to see when something was thoroughly designed. As crazy as some items are, what is even crazier is that these often bizarre or ludicrous outcomes were conducted in complete faith. Whatever these people were thinking, they held their own sense of rationality. This concept goes beyond the manufacturing world, and can be seen in social situations as well.

News broadcasting creates a vast source of “bounded rationality.” Often one side of the story is told and can leave people with a bias. According to the information they have heard, it is only rational for them to sway with what was presented. For example: presidential campaign adds try (nearly desperately) to create a lasting impression. Truly manipulating the principle of bounded rationality, the add writers are instilling a swayed rationality. They want to change your mind; and they use a subtle technique.
The concept of "bounded rationality" has given me a term I can place to this idea of a limited perception. In all their knowledge, in all their capacity, people make the most reasonable decision they know how. Daniel Kahneman likens bounded rationality to "intuitive thinking." In his lecture he goes in to detail the limiting factors of rationality, and says how there are inherent and inevitable flaws in intuition. The rationality that is accessible is incurred by intuitive understanding, drawing heavily on past experience/stimuli. To break free of limits presented, further inquisition, deeper insight, will need to be inquired.

Our “rational” decisions may be considered so under a certain set of variables, but entirely unreasonable under another, or if more are added. While not entirely informed, rational thinking/intuitive thinking usually does not include all of the “distant” components and idea creditability is hindered. By “bounded” rationality, it is not only limited but it is constricted as well. Bounded rationality is the idea that people make decisions based on their limited perceptions and go off of past understanding. This is a concept that we can see in any subject we look deep into.