People may appear to use rules of thumb, as suggested by the assumption of bound

Question

People may appear to use rules of thumb, as suggested by the assumption of bounded rationality, even though they may really be behaving in a manner suggested by the rationality assumption if .....

they face very different choices over a short period of time.

B.

they are seen to ignore substantial changes in the circumstances they face.

C.

they are seen to adjust their behaviors when they face sufficiently altered circumstances.

D.

they face persistently predictable range of choices for a period of time.

Explanation / Answer

People may appear to use rules of thumb, as suggested by the assumption of bounded rationality, even though they may really be behaving in a manner suggested by the rationality assumption if they face a persistently predictable ranges of choices for a time.

In such a scenario the consumer may have been settle into a repetitive behaviour due to rationality but it might seem a rule of thumb to outside observer. According to the bounded rationality , individuals should keep on relying a rule of thumb even if there is a major change in the environment faced by the individual. In economics, it is generally assumed that people make decisions that are in their rational self-interest.

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