How Can Bounded Rationality Influence Crypto Investors' Decision Making?

[Suba]

Bounded rationality is a concept that explains that humans will never be able to make perfectly rational decisions. We often try to think logically with various data and analysis, but unfortunately human abilities are still very limited, such as incomplete data, brain abilities that cannot possibly process all possibilities that will occur and limited time.

In economic theory, an investor is often described as a computer that is able to calculate and analyze all data and information, and decisions are taken based on wise and mature considerations. In the world of crypto prices move very quickly, and the many different news stories often make it difficult to think. Many crypto investors only consider crypto price signals and charts which are often thought to represent market conditions. The more often we practice and practice, the more we can minimize the negative impacts of bounded rationality.

 

[gwolf666]

Bounded rationality is a fundamental concept that explains why humans cannot make perfectly rational decisions. Although we try to analyze data and logical considerations, our capabilities are limited by incomplete information, restricted cognitive processing, and time constraints. In economics, investors are often portrayed as computers that can analyze all the information to make wise decisions; however, in the world of cryptocurrencies, the speed of change and the sheer volume of news make the analysis process difficult. Many investors rely solely on price signals and charts, which often reflect market conditions. Consistent practice helps reduce the negative effects of bounded rationality, allowing investors to make more informed and less impulsive decisions. Recognizing these limitations is key to better managing risk in volatile markets like crypto.