COMMERCE 1BA3 Lecture Notes - Lecture 6: Confirmation Bias, Bounded Rationality, Rationality
22 Mar 2017
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Document Summary
Decision making: the process of developing a commitment to some course of action (the last micro-ob topic being discussed, also referred to as problem-solving. Bundle (slide 20 -22): difference b/w rational + bounded-rational decision maker. Identify problem: search for relevant information, develop alternative solutions to the problem, evaluate alternative solutions, choose best solution, monitor and evaluate chosen solution, ideal (difficult to achieve) process, decisions are based on careful and calculated understanding of everything. Implement chosen solution (alternatives, possible solutions: describes how decisions should be made, rather than how they are actually made (above the water line, prescriptive decision-making model. Perfect vs. bounded rationality: perfect rationality, a decision strategy that is completely informed, perfectly logical, and oriented towards economic gain, bounded rationality, a decision strategy that relies on limited information and that reflects time constraints and political considerations. Justification: of a faulty decision in order to avoid dissonance apparently failing course of action: 3 most common resources: time, money, ego, 1.
