All rationality is bounded

Abstract Bounded rationality is typically understood as a concession to human cognitive limitations, a departure from an ideal coherent in principle if unattainable in practice. I argue this gets the relationship backwards. Unbounded rationality is a physical impossibility, and its attendant normative standards—Bayesian updating, sure loss avoidance, expected utility maximization, logical closure—are techniques for favorable circumstances when resources permit, not ideals from which mortals regrettably fall short. The argument rests on the physics of computation: any information-processing system incurs irreducible costs in energy and time. Three independent lines of support establish this conclusion. The first runs through Landauer’s principle. The second draws on Wolpert’s stochastic thermodynamics framework, extended by Kolchinsky and Wolpert to Turing machines, where thermodynamic costs track algorithmic complexity. The third draws on quantum-mechanical and relativistic bounds that fix finite ceilings on the operations any physical system can perform in a given region of space and time. These constraints bind all physical systems, natural or artificial. Coherence conditions like Savage’s axioms and Bayesian probability evaluate global states, not local procedures. No finite physical process can construct, verify, or maintain global coherence over a realistic state space. They can still function diagnostically, as devices for flagging departures worth explaining; what they cannot do is serve as action-guiding norms from which bounded reasoners fall short. Normative theories that presuppose unbounded rationality demand the physically impossible. Bounded rationality is not a departure from ideal rationality. It is the only kind there is.