Which of the following describes a characteristic of bounded rationality?

The concept of bounded rationality refers to the idea that individuals make decisions based on the information available to them, but their rationality is limited by various constraints such as cognitive limitations, time constraints, and the complexity of the situation. Therefore, recognizing the limitations of cognitive processing is a core characteristic of bounded rationality.

Individuals do not analyze every possible outcome exhaustively because they lack the necessary resources, both in terms of time and mental capacity, to do so. Instead, they simplify their decision-making processes by using heuristics or rules of thumb, which can help them make satisfactory decisions within their constraints. By acknowledging these limitations, bounded rationality captures the realistic approach people take when faced with complex decisions, distinguishing it from the notion of perfect rationality, where an individual would ideally consider all possible alternatives and outcomes without any limits.