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Suboptimal decisions
Suboptimal decisions are choices that don't result in the best possible outcome. In economics, suboptimal decisions often arise from factors like bounded rationality (as we just discussed) or market failures. Market failures happen when the price mechanism in a market doesn't work properly, causing inefficient outcomes. For example, if there's a negative externality - like pollution - the price of a good doesn't reflect the full cost of its production and consumption. As a result, people might make decisions that lead to too much pollution, which is a suboptimal outcome.