The Bounded Rationality Decision-Making Model

question 24

Multiple Choice

The bounded rationality decision-making model

• A)describes a series of steps that decision makers should consider if their goal is to maximize their outcome and make the best choice.
• B)recognizes the limitations of decision making processes by having individuals knowingly limit their options to a manageable set and choose the best alternative without conducting an exhaustive search of alternatives.
• C)refers to arriving at decisions without conscious reasoning,arguing that experts make decisions by scanning the environment for cues to recognize patterns.
• D)refers to arriving at decisions after first gathering information about the problem and then setting the problem consciously aside until an insightful solution to the problem arises.

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Definitions:

APR

Annual Percentage Rate; the annual rate charged for borrowing or earned through an investment, including any fees or additional costs associated with the transaction.

Loan

A sum of money that is borrowed, which must be paid back with interest, typically used for significant purchases, investing, or to cover cash flow shortfalls.

Balloon Loan

A type of loan that has low, fixed monthly payments for a period of time, followed by a large payment for the remaining amount due at the end of the term.

Amortized

Refers to the process of paying off debt over time in regular installments of interest and principal sufficient to repay the loan in full by its maturity date.