Title: Bounded rationality - Wikipedia
Headings: Bounded rationality
Bounded rationality
Contents
Origins
Model extensions
Relationship to Behavioral Economics
Relationship to Psychology
Influence on social network structure
See also
Reference List
Further reading
External links

Content: Behavioral economics
Bounded rationality implies the idea that humans take reasoning shortcuts that may lead to sub-optimal decision-making. Behavioral economists engage in mapping the decision shortcuts that agents use in order to help increase the effectiveness of human decision-making. One treatment of this idea comes from Cass Sunstein and Richard Thaler 's Nudge. Sunstein and Thaler recommend that choice architectures are modified in light of human agents' bounded rationality. A widely cited proposal from Sunstein and Thaler urges that healthier food be placed at sight level in order to increase the likelihood that a person will opt for that choice instead of a less healthy option. Some critics of Nudge have lodged attacks that modifying choice architectures will lead to people becoming worse decision-makers. Relationship to Psychology
The collaborative works of Daniel Kahneman and Amos Tversky expand upon Herbert A. Simon 's ideas in the attempt to create a map of bounded rationality. The research attempted to explore the choices made by what was assumed as rational agents compared to the choices made by individuals optimal beliefs and their satisficing behaviour. Kahneman cites that the research contributes mainly to the school of psychology due to imprecision of psychological research to fit the formal economic models, however, the theories are useful to economic theory as a way to expand simple and precise models and cover diverse psychological phenomena. Three major topics covered by the works of Daniel Kahneman and Amos Tversky include Heuristics of judgement, risky choice, and framing effect, which were a culmination of research that fit under what was defined by Herbert A. Simon as the Psychology of Bounded Rationality.