The concept that human decision-making is rational within limits, constrained by available information, cognitive limitations, and time pressure. Rather than finding optimal solutions, people make decisions that are 'good enough' given these practical constraints.
Coined by economist and cognitive scientist Herbert Simon in the 1950s, combining 'bounded' (limited) with 'rationality' from Latin 'rationalis' (reasonable). Simon challenged the economic assumption of perfect rationality, showing how real-world limitations affect decision-making.
Bounded rationality reveals that humans aren't broken computers - we're actually incredibly smart at making decent decisions with incomplete information under time pressure! We're not trying to find the perfect answer; we're trying to find a good enough answer quickly.
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