Definitions for

**"Bounded rationality"**Behavior that is rational within the parameters of a simplified model that captures the essential features of a problem.

"The capacity of the human mind for formulating and solving complex problems is very small compared with the size of the problems whose solution is required for objectively rational behavior in the real world -- or even for a reasonable approximation to such objective rationality." .

an influential concept developed by the Chicago School of the 1950s and 1960s. It challenged rationalist perspectives and suggested that the rationality of actual economic and firm behaviour was always partial, or â€˜bounded' by human limitations.