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Perception, Decision Making and Problem Solving - The Rational Decision-Making Model

Q: What is bounded rationality?

Bounded rationality occurs when decision makers have limits on their ability to assimilate large amounts of information.

4 important questions on Perception, Decision Making and Problem Solving - The Rational Decision-Making Model

What is the Rational Decision Making model?

(1) Problem or Opportunity Identification
(2) Information Search and Analysis
(3) Generate Alternatives
(4) Evaluate Alternatives
(5) Make Decision
(6) Develop Action Plans

What are the limitations of the Rational Decision Making Model?

(1) Managers sometimes fail to identify the problem correctly at the start of the decision-making process.
(2) Some managers only consider a few alternatives rather than a broad set of possible outcomes.
(3) Decisions are sometimes made without complete information due to the lack of availability of information relevant to the problem or time pressure.

What is bounded rationality?

Bounded rationality occurs when decision makers have limits on their ability to assimilate large amounts of information.

When does a person satisfice?

p.p1 {margin: 0.0px 0.0px 0.0px 0.0px; font: 15.0px Times; -webkit-text-stroke: #000000} span.s1 {font-kerning: none} span.s2 {font: 16.0px Times; font-kerning: none; color: #248a9f; -webkit-text-stroke: 0px #248a9f} people satisfice—in other words, they make a decision that is satisfactory but perhaps not optimal.