COMMERCE 1BA3 Lecture Notes - Lecture 1: Bounded Rationality, Rationality, Norm (Social)
11 Jan 2019
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Perfect rationality: perfect rationality is a decision strategy that is completely informed, perfectly logical, and oriented toward economic gain. The prototype is the economic person who is a perfect, cool, calculating decision- maker. These perfectly rational characteristics do not exist in real decision-makers. A decision strategy that is completely informed, perfectly logical, and oriented towards economic gain: bounded rationality. A decision strategy that relies on: limited information, time constraints, political considerations. What are the 9 reasons why our brains are bounded in rationalities: framing. Too little information (confirmation bias)- my dad and grandpa went here. Too much information (information overload)- look at too many schools: alternative development, evaluation & choice. Anchoring: the inadequate adjustment of subsequent estimates from an initial estimate that serves as an anchor *we use an anchor from which we make comparisons to then make decisions* ex.
