If decision makers have limited ability to calculate profits from all possible combinations of options, they are said to have
A)dementia.
B)bounded rationality.
C)Pareto inefficiency.
D)a maximin problem.

Question

Quizplus · Accepted Answer

Bounded rationality refers to the limited cognitive ability of decision makers to fully consider all options and potential outcomes. This can lead to suboptimal decision making, as decision makers may rely on heuristics or simplified decision rules instead of fully analyzing all available information. Dementia is a medical condition that affects cognitive ability, but is not necessarily related to decision making ability in non-medical contexts. Pareto inefficiency refers to a situation where one individual or group cannot be made better off without making someone else worse off, and is not directly related to decision making processes. A maximin problem refers to a decision making framework where a decision maker seeks to maximize the minimum possible outcome, and is not necessarily related to limited cognitive ability.

If Decision Makers Have Limited Ability to Calculate Profits from All