The three major assumptions underlying the economist's theory of choice are (1) decisions can be made costlessly, (2) our preferences are given and not shaped by society, and (3) that individuals maximize utility. Explain why each of those assumptions may not reflect reality. Why may the assumption of "bounded rationality" be more realistic?

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The Answer of The three major assumptions underlying the economist's theory of choice are (1) decisions can be made costlessly, (2) our preferences are given and not shaped by society, and (3) that individuals maximize utility. Explain why each of those assumptions may not reflect reality. Why may the assumption of "bounded rationality" be more realistic?

The Three Major Assumptions Underlying the Economist's Theory of Choice