Bounded Rationality
Etymology
Coined by economist and cognitive scientist Herbert Simon in the 1950s, who won a Nobel partly for it. “Bounded” is from “bound,” a limit or boundary, from Old French “bodne”; “rationality” is from Latin “ratio,” reckoning or reason. The pairing deliberately fences reason inside human limits.
noun phrase · /BOWN-did rash-uh-NAL-ih-tee/
The idea that people make reasonable decisions within the real limits of their information, time, and mental capacity, rather than optimizing perfectly.
What it names
A handle for why smart people settle for “good enough” — it reframes apparent irrationality as sensible behavior under constraints, and it is the foundation of behavioral economics.
Example
Bounded rationality explains why shoppers grab a familiar brand instead of comparing all forty options.
Related idea
It is the corrective to homo economicus: same reasoning agent, but stripped of the fantasy that anyone has unlimited information or computing power.