Question

________ refers to a less-than-perfect form of rationality in which decision makers cannot be perfectly rational because decisions are complex and complete information is unavailable or cannot be fully processed

Answer 1

Bounded rationality explains when decision-makers are less than 100% certain due to the complexity of decisions and imperfect information. It is related to imperfect or asymmetric information, where either the buyer or seller lacks complete knowledge about a transaction, potentially leading to market challenges.

Step-by-step explanation:

The concept being described is known as bounded rationality, which refers to the limitations on the decision-making process due to the complexity of the world and the limits of human computational power. When decision-makers face imperfect information, they are less than 100% certain about the qualities of what they are buying or selling. Imperfect information can lead to a situation of asymmetric information, where the buyer or seller has more information about the product than the other party, making it difficult to make fully informed decisions. In markets with highly imperfect information, the existence of the market itself can be challenged unless remedies are introduced to assist buyers and sellers in making more informed decisions.