Final answer:
The term that illustrates the limitations of the decision-making process due to incomplete information and our capacity to process information is bounded rationality. It leads to satisficing rather than optimal decision-making.
Step-by-step explanation:
The term that illustrates that the decision-making process is limited by incomplete information as well as our capacity to process all the information is c) Bounded rationality. Bounded rationality recognizes that humans try to make rational decisions, but are limited by the information available, the cognitive limitations of their minds, and the finite amount of time they have to make decisions. In contrast to the optimal decisions suggested by classical rationality, bounded rationality leads to satisficing—searching through the available alternatives until an acceptability threshold is met rather than seeking the best possible decision.
Options such as heuristics are related concepts, as they are mental shortcuts or rules of thumb that people often use in decision-making processes to reduce the cognitive load when confronted with complex problems. However, these are not the defining aspect of bounded rationality, although they can be a component of the decision-making process within those bounds.