Bounded rationality is the idea that we make decisions that are rational, but within the limits of the information available to us and our mental capabilities. Economists who think of us as ‘boundedly rational’ don’t see us as an ‘economic superman’, or homo economicus that spends his life optimizing the happiness created by every decision. Instead, they see us as satisficers — as people who choose the option that will satisfy their needs and wants without putting too much effort into making sure they’ve considering every single possibility.
Bounded rationality basically tones down a lot of the assumptions that go into homo economicus. Satisficers are a more diverse bunch, with unique tastes and preferences that change over time. Satisficers are not particularly good at making consistent decisions or predicting consequences of their choices. They often decide things, not out of calculated self-interest, but for other reasons, social norms, ethics, fairness, love, peer pressure, and so on. Sometimes they even decide things on a whim, with little or no thought of the consequences.
Satisficers almost never have full information about a choice, and the time and energy needed to get more information is usually just not worth the bother. They often don’t even know exactly what they want, or what will make them happy. While homo economicus, generally speaking, gets happier by buying more things, the satisficer is more complicated, and is often more concerned about how they’re doing in relation to other people.
The satisficer obviously looks a lot more like a human being than homo economicus does. But this makes the satisficer much harder to predict. Their decision-making process is complex, and incorporates a lot of different variables. They’re shaped by other people and the economic situation they find themselves in. All this makes it harder to make sweeping claims about what satisficers will do in a given situation. And even the satisficer is a simplification of how people actually behave! Turns out we’re a pretty complicated bunch.