FIT5094 Lecture Notes - Lecture 4: Cognitive Psychology, Bounded Rationality, Rationality
29 Jun 2018
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WEEK 4
Descriptive Models of Decision-Making
1.Simon’s Model: Most influential model of decision making.
2.MRT Model
1. Simon’s Model occurs in three stages.
Intelligence: Search environment, Information gathering, Collecting requirements, Military research
Design: Alternatives to problem solving, Criteria to evaluate final decision.
Choice: Chose the best alternative fulfilling the criteria.
Finally, review the decision: Reflect on the choice made.
Recursive Process
Each stage can be decomposed further, complex.
Bounded Rationality
The capacity of the human mind for formulating & solving complex problems is very small compared
with the size of the problems whose solution is required for objectively rational behaviour in the real
world.
Decision-making limitations
1. Lack important information.
2. Time and cost constraints.
3. Memory.
4. Intelligence.
Decision Types
1. Structured: All routines at all levels can be specified. Programmed.
2. Unstructured: Can’t specify major routines. Unprogrammed. High equivocality and
Uncertainty.
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Document Summary
1. simon"s model: most influential model of decision making. 2. mrt model: simon"s model occurs in three stages. Intelligence: search environment, information gathering, collecting requirements, military research. Design: alternatives to problem solving, criteria to evaluate final decision. Choice: chose the best alternative fulfilling the criteria. Finally, review the decision: reflect on the choice made. The capacity of the human mind for formulating & solving complex problems is very small compared with the size of the problems whose solution is required for objectively rational behaviour in the real world. Decision-making limitations: lack important information, time and cost constraints, memory. Decision types: structured: all routines at all levels can be specified. Diagnosis: reach a threshold for making a particular decision, understand the scope and nature of the problem. Search: look for an already designed solution of the problem. Design: find own solution, design one for self. Screen: filter out or eliminate all the alternatives and select the best solution.
