Vector Autoregression (VAR) is a statistical model used extensively in econometrics, known for its ability to capture the linear interdependencies among multiple time series. VAR models are particularly favored in economic forecasting where the behavior of several closely related economic variables needs to be forecast simultaneously.
Bounded rationality is a concept in economics and decision theory that acknowledges the limitations of decision makers in terms of the information they have, their cognitive capabilities, and the finite time they have to make decisions. The term was coined by Herbert A. Simon, an economist and psychologist who noted that while traditional models of decision-making in economics and other fields assumed that individuals acted rationally to maximize their utility, real human behavior often deviates from this ideal due to practical constraints.