In this video, we’re diving into a key concept from behavioural economics: Bounded Rationality. This case study explores how real-life decision-making often strays from textbook rationality – and what that means for markets, consumers, and businesses in the real world.

🧠 Bounded Rationality – Summary:

Bounded Rationality explains why people don’t always make “perfect” decisions. Instead, they make choices that are good enough—limited by time, information, and brainpower.

Coined by Herbert Simon, the theory shows that people use heuristics (mental shortcuts), especially in complex, fast-moving situations like shopping, investing, or choosing food. Instead of optimizing, they satisfice—settle for what works.

It's a realistic look at human decision-making in the real world—not the idealised version in classical economics.