COMMERCE 1B03 Lecture 8: Chapter 11
27 May 2016
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Document Summary
Decision making: the process of developing a commitment to some course of action. Can also be described as process of problem solving. Problem: a perceived gap between an existing state and a desired state. Well-structured problem: a problem for which the existing state is clear, the desired state is clear, and how to get from one state to the other is fairly obvious. Program: a standardized way of solving a problem. Ill-structured problem: a problem for which the existing and desired states are unclear and the method of getting to the desired state is unknown. Often complex and involve high degree of uncertainty. Programs usually not work as more data and analysis is needed. Perfect rationality: a decision strategy that is completely informed, perfectly logical, and oriented toward economic gain. Bounded rationality: a decision strategy that relies on limited information and that reflects time constraints and political considerations. Emotion and mood affect how we make decision.
