Utility-maximising rationality | vs. | Bounded rationality |
Axiomisation of utility and subjective probability [16] [17] : |
| Taking account of the choice context and behavioural process [15] [18] [19] [20] [21] : |
- Paradigm of “fully” rational decision & maximizing utility or profit-function - Axioms of rationality are based on market transparency and total information on behavioral alternatives, relevant attributes and related consequences as well as definite and transitive preferences - No cognitive limitations in processing attributes and choice alternatives
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| - Satisficing instead of optimizing criteria - Individuals do not base choices on time-consistent utility functions over all objects - Individuals have partial, imperfect biased cognitive representations and use decisional heuristics to cope with choice under uncertainty - “Framing” decisional context influences the estimation of behavioural consequences |