thinking-bounded-rationalitylisted

# Bounded Rationality and Satisficing ## Overview Herbert Simon's Bounded Rationality recognizes that human decision-making is limited by three fundamental constraints: available information, cognitive capacity, and time. Rather than pursuing optimal solutions (which is often impossible), Simon proposed "satisficing"—a portmanteau of satisfy + suffice—choosing solutions that are good enough to meet requirements. **Core Principle:** "Decision makers can satisfice either by finding optimum solutions for a simplified world, or by finding satisfactory solutions for a more realistic world." — Herbert Simon ## When to Use - Making design decisions under time pressure - Facing complex problems with incomplete information - Analysis paralysis is blocking progress - Optimization costs exceed potential benefits - Need to set stopping criteria for searches/research - Evaluating when "good enough" beats "perfect" - Resource allocation under constraints Decision flow: ``` Decision needed? → yes → Do you have perfect information? → rarely ↘ Is optimization cost justified? → no → SATISFICE ↘ yes → Optimize (but verify cost) ``` ## The Three Constraints ### 1. Information Bounds **What you can know is limited** - Complete information rarely exists - Gathering more information has costs - Information has diminishing returns - Future states are inherently