HROB 2100 Lecture Notes - Lecture 5: Resistance 3, Bounded Rationality, Satisficing
15 Nov 2017
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Decision: choice made from two or more alternatives. Rational: choices that are consistent and value-maximizing within specified constraints. Rational decision-making: six step decision-making process, describes how individuals should behave in order to maximize some outcome. Exhibit 12-1 steps in the rational decision-making model. The rational decision-making model assumes that the decision maker has complete information, is able to identify all the relevant options in an unbiased manner, and chooses the option with the highest utility. Most decisions don"t follow the rational model; people are usually content to find an acceptable or reasonable solution to a problem rather than an optimal one. Choices tend to be limited to the neighbourhood of the problem symptom and the current alternative. Bounded rationality: limitations on one"s ability to interpret, process and act on information. Identifying a solution that is good enough : the first acceptable option rather than the optimal one.
