A Level Economics AQA Practice Exam

What does Bounded Self-Control indicate about individuals' decision-making?

1. They always act in their best interest

2. They have complete control over their decisions

3. They sometimes struggle to make self-interested choices

4. They are fully rational in all circumstances

The correct answer is: They sometimes struggle to make self-interested choices

Bounded self-control refers to the idea that individuals have limitations in their ability to make decisions that reflect their long-term best interests. This concept acknowledges that while individuals may generally want to make rational choices, various factors can lead them to deviate from these intentions. When it is stated that individuals sometimes struggle to make self-interested choices, it highlights the reality that external influences, emotional states, cognitive biases, and immediate temptations can cause people to make decisions that are not aligned with their long-term goals or well-being. For instance, a person may intend to save money for future expenses but might impulsively spend it due to short-term desires. This struggle underscores the concept of bounded rationality, where individuals' decision-making capabilities are constrained by their lack of self-control and the complexity of the environment in which they operate. This understanding is crucial in economics as it helps explain various phenomena, such as consumer behavior, savings rates, and the effectiveness of policies aimed at improving self-control among individuals.