What is bounded rationality?

Bounded rationality is a behavioural economics theory which suggests the cognitive, decision-making capacity of humans can't be fully rational due to a number of limits we face. This contrasts with traditional economic theory that suggests humans are rational decision makers, looking to achieve maximum utility. The limits humans face when making decisions include: Time - the amount of time we have to make decisions. Limits of the human brain - to process information and consider every possible decision. Imperfect knowledge (information failure) - the lack of perfect information - we don't have all the reliable information to make fully informed decisions.