Author(s)

Xi Wang ¹

Affiliation(s)

¹ Kimball Union Academy, Meriden 03770, NH, USA

Corresponding Author

Xi Wang

ABSTRACT

The classical economic model of homo economicus has shaped modern economics through its mathematical elegance but at the cost of psychological realism. Over seven decades, an alternative vision has emerged: the human decision-maker as a boundedly rational organism who adapts to uncertainty through heuristics, satisficing, and selective attention. This paper develops a comprehensive meta-synthesis linking bounded rationality and cognitive bias across theoretical, empirical, and institutional domains. It traces the evolution from Simon's procedural rationality to Gigerenzer's ecological heuristics, Kahneman's dual-process framework, Rabin's confirmatory bias, and Thaler's behavioural policy paradigm. Drawing findings from markets, organizations, and policy design, by identifying cognitive limitation, heuristic adaptation, systematic bias, and institutional response and argues that bounded rationality is not a deviation from reason but its contextual realization. Understanding how human cognition produces both efficiency and error illuminates how economies function in practice and how institutions can harness human limitation. The analysis concludes by situating bounded rationality within emerging algorithmic environments, where machine and human biases increasingly interact.

KEYWORDS

Bounded Rationality, Cognitive Bias, Heuristics, Behavioural Economics, Adaptive Decision-Making, Policy Design, Cognition, Institutional Economics

CITE THIS PAPER

Xi Wang, Bounded Rationality and Cognitive Bias: A Meta-Synthetic Framework for Behavioral Economics. Information Systems and Economics (2025) Vol. 6: 138-149. DOI: http://dx.doi.org/10.23977/infse.2025.060218.

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