RSM260H1 Lecture Notes - Lecture 5: Bounded Rationality, Fallacy, Rationality
Document Summary
The process of developing a commitment to some course of action. Options, attributes, picking a strategy-> this is where we have bias: we identify a problem, we establish preferences and desired outcomes. A problem for which the state is clear, the desired state is clear, and how to get from one state to another is fairly obvious. A program is a standardized way of solving problems. Heuristics: gaze heuristics, provide means of solving well-structured problems. Cue of a broken leg, you know to fix his leg instead of checking for diabetes. Perfect rationality a decision strategy that is completely informed, perfectly logical, and oriented toward economic gain. Decision-maker can compute maximization of value and choose appropriately: not affected by descriptions of options/attributes, not affected by context, not affected by elicitation methods. Search and experience goods, some attributes may be unknown. Between attributes (saving /coffee and use it to other stuffs)
