Final answer:
The concept is known as Bounded Rationality and recognizes that people have limitations in their cognitive capacity to process information for decision-making.
Step-by-step explanation:
The concept that people have the time and cognitive ability to process only a limited amount of information on which to base decisions is known as Bounded Rationality. This concept recognizes that humans have limitations in their cognitive capacity and cannot process an unlimited amount of information to make decisions.
For example, when choosing a college major, a student may only have a limited amount of information available to them, such as the majors offered and their own interests and abilities. They cannot consider every possible major and all the associated information, so they must make a decision based on the limited information they have.
This concept is different from Information Overload, which refers to the overwhelming amount of information available to individuals in the modern Information Age. Bounded rationality acknowledges that individuals cannot process all of this information and must make decisions based on a subset of available information.