Bounded rationality is the process by which we all make decisions of all types, regardless of what the subject matter or how important they may seem. It is the idea that when we make a decision, our own rationality is restricted by the information that we have at the time of making the decision. It is also limited by the cognitive functions of our minds, as well as the amount of time that we have to make a final decision. These three factors are always present whenever we make a decision and are the way in which we rationalize how that decision should be made. It goes hand in hand with the theory of rationality as optimization. This theory states that human beings when faced with a decision, will use a rational process to try and find the best possible choice given all of the information available at the time.
Randomness is defined as the lack of predictability surrounding things that happen in our everyday lives. It recognizes the fact that we cannot control all elements of our surroundings and that even though we plan our actions and behavior in a certain way, this could be affected by any number of unforeseen circumstances which we would be completely unable to predict. The things that happen do not have a sequence or pattern so you have no way of knowing what will happen or when.
Understanding the theories which explain how we make a decision might actually help indecisive people to become more decisive. If you know that whichever option you pick, whatever decision you choose to make, will be subject to randomness, you will understand that you cannot control everything and the decision then may seem less daunting. When randomness comes into the question, we can see that any decision we make will be subject to change by outside forces and influences, so we won’t be in control of what happens every step of the way. Since we don’t get the final say in how things pan out, the decision can seem less of a final, definitive choice, and more of a stepping stone on the way to achieving the desired outcome.
By understanding bounded rationality we know that we are limited when we make a decision. We can’t kick ourselves for not having a piece of information that we find out after the decision has been made since it was completely out of our control. We can only make decisions if we have the cognitive ability to do so, the time necessary to properly think things through, and all of the information necessary to choose between different options. If any of these elements are compromised at the time of making the decision then it is possible that we would choose a different option than we would under different circumstances. By knowing that we can only make decisions based on what we already know, decisions can become less difficult to make, as it becomes clear that there isn’t always a right or wrong answer in every situation.