How does the concept of bounded rationality explain the impact of anchoring on decision-making in behavioral economics?

Bounded rationality is the idea that when people make decisions, they do not have all the information or the ability to process everything perfectly. Instead, they rely on mental shortcuts or "heuristics" to simplify complex choices. Anchoring is one such heuristic where people start with an initial piece of information, or "anchor," and use it as a reference point for making decisions, even if it is irrelevant. For example, if someone sees a shirt priced at $100 and then sees a similar shirt for $50, they might think the second shirt is a great deal, influenced by the first price as their anchor. This shows how bounded rationality and anchoring can lead to decisions that are not fully rational, as the initial anchor can skew our judgment and lead us to overlook better options.