BUSI 2101 Lecture Notes - Lecture 8: Bounded Rationality, Groupthink, Victor Vroom
22 Apr 2016
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Tuesday, march 22, 2016: the rational decision-making process. Herbert simon won a nobel prize for his theory of bounded rationality, which maintains that people are restricted in the information they possess to make decisions, engage in limited search for solutions and settle for less than optimal solutions. In other words there are limits or bounds on rationality. Another constraint on the decision making process is bounded discretion, which limits decision alternatives to those that fall within the bounds of current moral and ethical standards. Heuristics are rules of thumb based on past experience that managers use to simplify decision making. This model of decision making diverse even more radically than bounded rationality from the conception of decision making as a rational process. In the garbage can model, four factors problems, participants, solutions and choice opportunities all. Oat randomly inside an organization, described metaphorically as a garbage can.
