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Management & Leadership vocabulary · Decision Making

Bounded rationality

Meaning in management & leadership, with examples

nounAdvanced term

In management & leadership, bounded rationality means: The limits on fully rational decision-making caused by restricted information, time and mental processing capacity.

In Turkish: sınırlı rasyonellik

How it is used

Use to explain why decision makers simplify choices even when they try to act reasonably.

Example sentences

  1. Bounded rationality meant that the manager compared five suppliers rather than every possible supplier.

    Limited search reflects constraints on the decision process rather than deliberate carelessness.

  2. The case study used bounded rationality to explain the team's reliance on simplified demand estimates.

    Simplification helps people decide when complete analysis is impractical.

Common collocations

  • bounded rationality model
  • limits of bounded rationality
  • decision-makingThe process of choosing between different options, including collecting information, weighing risks and benefits, and agreeing who makes the final choice.
  • data-drivenBased on the analysis of facts and figures rather than on opinion, habit or intuition; used about decisions, company cultures and organisations.

More terms: Decision Making

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