Abstract
Bounded rationality refers to the fact that decision makers are intentionally rational, but only in a limited sense. They are constrained in their rationality by a variety of environmental, organizational and cognitive aspects. Bounded rationality (also sometimes called limited rationality) has become a foundation stone for subsequent developments in strategic management and organization theory as well as certain developments in economics. As a result of bounded rationality, decision makers in organizations do not maximize expected utility. Instead, they often develop (and rely on) rules of thumb and other heuristics when making decisions.
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Augier, M. (2016). Bounded Rationality. In: Augier, M., Teece, D. (eds) The Palgrave Encyclopedia of Strategic Management. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-94848-2_533-1
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DOI: https://doi.org/10.1057/978-1-349-94848-2_533-1
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