Artificial Intelligence Programming Practice Exam

What concept is bounded rationality associated with?

1. Unlimited access to information for decision-making

2. Rational decision-making only based on available information and cognitive limitations

3. The belief that all decisions are inherently irrational

4. The view that time is irrelevant to decision-making processes

The correct answer is: Rational decision-making only based on available information and cognitive limitations

Bounded rationality refers to the idea that in decision-making, individuals are limited by the information they have, the cognitive capabilities they possess, and the finite amount of time they have to make a choice. This concept, introduced by Herbert Simon, acknowledges that while people strive to make rational decisions, their ability to do so is constrained by various factors, such as incomplete information, uncertainty about future outcomes, and the limits of human cognition. In this context, rational decision-making is not about achieving the optimal choice but rather making the best possible decision within the constraints of these limitations. Individuals often use heuristics or rules of thumb to simplify the process, leading to satisfactory rather than optimal solutions. This understanding is critical in fields such as economics, psychology, and artificial intelligence, particularly when modeling human decision-making processes and designing systems that align with human reasoning capabilities. The other concepts mentioned do not accurately capture the essence of bounded rationality. Unlimited access to information does not align with the bounded nature of rationality. The idea that all decisions are irrational contradicts the notion that individuals can still make rational choices, albeit imperfectly. Lastly, the irrelevance of time in decision-making overlooks one of the critical constraints that individuals face when making decisions, as time pressure often