The Lens of Rationality: Why Bounded Rationality Matters

note: This post is the script for a short video I just released. The video can be found on at the end of this post and on the Intermittent Diversion YouTube channel.


Alright, let’s imagine I’m trying to catch a fly ball–how do I decide how to best position myself to catch that ball?

The obvious answer is to calculate the ball’s arc and trajectory using this formula and then find the exact place I should stand to catch the ball

And I’m going to do this because I’m rational…right?

Probably not.

I might be rational, but there’s no way I could calculate the ball’s trajectory and find the best place to position myself before it lands.

The point that I’m teasing out here is that we humans have what’s called “bounded rationality.”

And this just means that, when we make decisions, we have limits. We only have access to so much brain power and knowledge and we only have so much time to make a decision.

As a result, we’re going to rely upon our intuition and we ’re going to use mental shortcuts to make quick decisions.

This is why–when that fly ball is coming towards me, I’m going to keep my eye on it and stay under the ball–I’m going to use my intuition to figure out how to catch the ball, I’m not going to calculate its path.

Now, bounded rationality says that there are limits on our rationality, but it doesn’t mean that we are irrational. It’s more of an acknowledgement that we are part rational and part irrational in our actions.

We don’t operate in binary–we operate on more of a spectrum. Where we sit on this spectrum changes based on our environment and the resources available to us.

Rational decision making models are great–they give us useful ways of looking at the world, but they often fall short in the sense that humans don’t actually use them.

Reality isn’t characterized by simple environments and limitless resources.

This is why we use mental shortcuts instead–they help us navigate complex environments.

This is important because: how we understand rationality influences the way we look at the world. And to create a more realistic view of the world, we need to remember that:

  1. Our environment is complex and our resources are limited
  2. We are part rational and part irrational in our actions

When we view the world through the lens of rationality, we set ourselves up for failure. We expect too much of ourselves, we make poor predictions, and we’re left unhappy.

But, we don’t have to do this. Once we recognize the limits of our rationality, we can start to understand how we deal with the world we live in. We can paint a more realistic picture of human beings. We can accept our nature and work with it rather than against it.

“Human behavior is intendedly rational, but only limitedly so”

–Herbert Simon