Bounded rationality and bounded self-control
People cannot always make perfectly rational decisions. Bounded rationality means limited information and brainpower restrict our choices. Bounded self-control means we often act against our own long-term interests.
Real World
Despite knowing smoking causes cancer, millions of UK adults continue to smoke — a textbook case of bounded self-control where the short-term satisfaction of a cigarette overrides long-run health intentions.
Exam Focus
Credit Herbert Simon for bounded rationality; for bounded self-control, link to present bias — naming theorists signals evaluative depth to examiners.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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