What is bounded rationality?

• A. A principle that decision choices are restricted only by legal and institutional rules
• B. The idea that people's rationality is limited by cognitive constraints, incomplete information, and time, so they satisfice instead of fully optimizing
• C. A decision-making model where individuals optimize perfectly with full information and unlimited cognitive capacity
• D. The notion that people always make irrational choices driven solely by emotions

Answer: (B)