Bounded rationality recognizes that people and organizations make decisions without unlimited information, time, or computational capacity. Herbert Simon emphasized the practical constraints under which real choices are made.
Optimization is not the only form of rationality
Where all alternatives cannot be enumerated and compared, finding an option that meets sufficiently demanding requirements—often described as satisficing—may be reasonable. This is not a blanket excuse for weak decisions; it is a way to consider the costs of search and evaluation.
Evaluate the procedure as well as the outcome
A decision may turn out well by chance. Ask instead what information was available, which alternatives were considered, and why the choice was made when it was. The quality of the decision process is not identical to the outcome.
Implications for AI
AI systems do not see every relevant detail inside an organization or in the physical world. A convincing recommendation may still lack crucial conditions known only to the user. A foundational source is Simon’s A Behavioral Model of Rational Choice (1955).