What is "bounded rationality"? How can I overcome it when making decisions?

You're looking for a new place to have lunch, and you have hundreds of places saved on your foodie app, Yelp. You don't know where to go, and you don't have time to look through all of your saves. You check one or two reviews and pick something that seems fine: burgers.

But wait — this is bounded rationality! Could you have chosen a better option? What's bounded rationality, and how does it affect your decision-making?

Bounded rationality is based on the idea that you don't make perfectly logical/ideal choices due to real-world limitations. This forces you to make the best choice based on your current circumstances. Example: You have hundreds of pieces of clothing, but you don't look through every single one to decide what to wear. You grab something that's convenient (in front of you) and fits your needs (something to wear to work). This shortcut decision-making is bounded rationality!

Sometimes, it's impossible to process all of the information or evaluate every option/consequence. You try to make the best decisions, but life is complicated. Some factors that make you prone to bounded rationality include:

• limited information

• time constraints

• the complexity of the decision's impacts

Therefore, you choose what's most convenient and reasonable with the information and time that you have.

This explains why people use heuristics (mental shortcuts) in making decisions, such as anchoring or availability bias.

Bounded rationality can help you make a quick decision, but you can make smarter choices by:

• Focusing on your goal. Prioritize choices that meet your goals.

  Example: "I will choose the option that allows me to X."

• Being well-informed. Don't limit yourself to just one perspective! Consider 3-5 choices before you decide.

  Example: Check different stores and brands.

• Taking time to make a decision. Don't rush! Give yourself time to think and revisit the choice after some time has passed

  Example: Wait 3-5 days before making big decisions.

• Use organization tools. Create pro-con lists and checklists that will help you sort your choices.

  Example: A checklist of requirements/needs, a pro-con list comparing costs and features.

• Get others' opinions. You can talk your ideas out with a friend or ask for their choice (and hear why they chose it).

  Example: Getting opinions from friends, family members, coworkers, and mentors.

Felicity is looking for a new drawing tablet for her art class. She finds one highly rated option and looks through some of the product descriptions and pictures. Seeing how long the descriptions and reviews are, she skims over them after seeing the photos. Felicity decides to buy the drawing tablet.

Felicity's purchase was made using bounded rationality, but she could've made a smarter choice.

What can she do to make sure she makes a well-informed purchase? Select all that apply.

A. Read the product description/reviews more thoroughly.

B. Consider similar products that meet her goals.

C. Research other products made by the same brand.

D. Ask her teacher and classmates for product recommendations.

Let's go back to that Yelp food selection conundrum. After pausing to think about what you really want, you realize you're craving pizza! You check Yelp again, see that you've saved a new trendy pizza parlor, read through the reviews, and now know where to go.

When you step back from bounded rationality to consider your goals and options, you can make the best — and tastiest — choice for yourself! Don't let bounded rationality limit what you can do! Be sure to: