If the managers of your firm have bounded rationality, then
A)the firm should fire them and hire more competent managers.
B)a Nash equilibrium does not exist.
C)they are limited in their ability to calculate and may not succeed in maximizing profits.
D)it is not possible to maximize profits.

Question

Quizplus · Accepted Answer

Bounded rationality means that managers have limitations in their ability to calculate and process information, which may impede their ability to make optimal decisions. This suggests that they may not be able to fully succeed in maximizing profits for the firm. However, it does not necessarily mean that they should be fired or that a Nash equilibrium does not exist, as these depend on other factors such as the overall performance of the firm and the market conditions.

If the Managers of Your Firm Have Bounded Rationality, Then