q. What is “limited rationality”?
a. It’s like bounded rationality, except… well, it’s the same thing, but I think “limited rationality” has a better ring to it. In reality, everyone is always acting in a rationally limited manner. I think it is put best in Russell and Norvig’s Artificial Intelligence: A Modern Approach :
Consider the following example: I am walking along the Champs Elysees one day and I see an old friend across the street. There is no traffic nearby and I’m not otherwise engaged, so, being rational, I start to cross the street. Meanwhile, at 33,000 feet, a cargo door falls off a passing airline, and before I make it to the other side of the street I am flattened. Was I irrational to cross the street? It is unlikely that my obituary would read “Idiot attempts to cross street.”