Bounded rationality describes the type of rationality that individuals and organizations utilize when confronted with complex decisions in real-life, fast-moving situations where perfect information is unavailable. Instead of aiming to maximize profits, decision-makers seek acceptable solutions that yield satisfactory results.
The Halo Effect refers to the cognitive bias where an observer's overall impression of a person influences their feelings and thoughts about that person's specific traits or abilities.
Information inductance refers to the extent to which a person's behavior is affected by the information they are required to communicate. This concept highlights the potential biases in the presentation and interpretation of key financial data.
The misconception that an increase in nominal income or wealth translates directly to an increase in real purchasing power, despite similar rises in price levels.
